This week, the Senate approved an additional $310 billion in Paycheck Protection Program relief dollars as part of its second round of stimulus efforts for small business owners.
Meant to be a lifeline for the country’s small businesses amid the COVID-19 pandemic, the initial $349 billion approved by the Senate as part of the $2.2 trillion CARES Act on March 25 was quickly sucked up, with banks like Wells Fargo closing applications within days of accepting applications. Companies that received multimillion-dollar support like Shake Shack and Ruth’s Chris reportedly have returned their support after critics and struggling mom-and-pop shops cried foul.
Despite the lifelines extended by the government to businesses around the country, the distribution of dollars largely depended upon where you lived and where you banked.
In an attempt to fill the gap for skipped-over Black business owners, Black-owned brands like Essence + New Voices Foundation are set to host a $100,000 pitch competition this week. Non-dilutive grants are also springing up like digitalundivided’s The Doonie Fund and regional efforts supported by private foundations and family offices.
Even Facebook tagged in this week and announced a $100 million global grant initiative, $20 million of which is earmarked for minority businesses identified within its 28 target cities in both urban and rural communities.
We surveyed a segment of The Plug PRO subscribers who self-identify as Black founders running companies in industry areas ranging from data analytics services to esports to virtual reality.
Our goal was to collect sentiments on how they’re being impacted by the current climate and whether they feel their business will survive over the next 90 days.
While more than half indicated they applied for the PPP loan, no one confirmed, in a separate question, that they had indeed received funds.
Despite indicating that they would be unable to cover their expenses over the next 3 months, founders felt they would still be able to survive in the 3rd and 4th quarters.
We also asked founders to share additional details about their current experience. Here’s what they shared:
- When not being able to travel, hinders success. As an early-stage company in such a new industry such as Virtual Reality – we are heavily reliant on in-person user demos. Spring/Summer is significant to our sales efforts. The inability to travel and engage with potential customers has presented a considerable bottleneck.
- The uncertainty of future earnings and employee retention. Our client base is split between public and private sector making us a little more resilient…for now. The major challenge is keeping highly skilled staff who have the option to go work for massive companies.
- Will it stick? Or are online sales numbers only temporary indicators? We launched our online shop for black-owned brands about a week or two before social distancing was put in place here in Charlotte. In that way, it’s hard to tell if these are “normal” sales numbers or not. That said, we’re thankful to still be selling, still be growing our community, and still maintaining strong relationships with brand partners, some of whom have had a few interruptions due to COVID-19. It’s a tricky landscape, but we’re determined to keep our feet moving beneath us.
Some founders shared the depth of their struggle with mass revenue reduction and being forced to lay off employees.
- Nonprofit sector takes a beating. Our business is struggling. We lost about 70% of our Q2 projected revenue as many of our philanthropic + nonprofit clients have had to pull back. We’re working hard to pivot our business to virtual service delivery. We’ve significantly cut revenues to extend our runway but have proudly preserved our three-person staff salaries and fringe.
- Protecting runway for the short-term. We did have to lay off our only employee in order to be able to pay other operations expenses for the next 90 days.
- Standing still to stay sustainable. I’ve not yet heard anything on any of the applications I completed. I’m worried that I can’t keep my staff if we lose any revenue. Additionally, I had a new contract to pay for hiring additional staff and now those dollars are on hold.