Rosie Torres opened her flower shop in Fresno, California, 14 years ago. It was an American dream rooted in her mother’s dying wish.
“I promised her that I would do it on my own since I worked for so many people for so many years,” Torres said. “So I decided to open it and my mom passed a couple of weeks after we opened the shop.”
“There’s billions of dollars that are there,” she said. “I’m hoping and praying that with our determination, each one of us … would be able to receive something, some type of funding to help us.”
Torres’ shop is just one of many small businesses that desperately need the money. But owners are running into one roadblock after another as they try to navigate the federal government's program, which is meant to be their lifeline. Some have become so frustrated that they have taken their grievances to court.
Now, months into the pandemic, critics of the Payment Protection Program (PPP) are decrying the millions of dollars that have gone to well-established corporations. One reality TV star is accused of spending his PPP loan on luxury items for himself, while people like Torres are running out of time before they lose their businesses entirely.
“When everything falls, it’s a domino effect,” Torres said.
The federal funding for businesses is tied to the CARES Act that Congress passed in March to help revive the crumbling economy. It was an all-encompassing $2 trillion aid package meant to help the millions of Americans impacted by COVID-19.
A quarter of that aid money went to the federal government’s PPP, designed to provide financial relief for small businesses and their employees.
At least 100,000 small businesses have had to close since the pandemic spread across the United States in March, according to the National Bureau of Economic Research. More than 47 million Americans have filed new claims for unemployment benefits in the last 14 weeks, according to the the Department of Labor.
“In this small community here that I'm aware of, only one [business] has received one of the grants,” Torres said. “All the others that I know of have not received anything yet.”
Torres is one of the minority female business owners President Donald Trump said would benefit from PPP, but without receiving federal aid and her sales declining, she said she has had to lay off three employees.
She said her dire situation due to the pandemic started to sink in after the first month her shop was closed and she had to start digging into her savings to keep paying her employees.
“[That] was a big concern,” she said. “How are they going to feed their families?”
Torres said she spent months caught in a PPP runaround trying to get responses from banks, which were given the responsibility of processing the loans.
“First I used our bank that we used for [the] business and they referred me to a different source... Never got a reply,” Torres said. “So I decided to go through a different bank … and they … [said] I would have to have a business loan through their bank, which we didn't."
Torres said she then reached out to her local small business administration to see if it could help.
“But I got a returned email saying that they weren’t accepting [loans] any more,” she continued.
In the end, she had tried applying for a loan through four different banks.
Meanwhile, large corporations like Shake Shack, Ruth Chris’ Steakhouse and the Los Angeles Lakers had received $35 million in loans due to loose guidelines that qualified them as small businesses. After facing public backlash and outrage, all three returned the federal funding.
But even the businesses that managed to receive the federal grants are realizing that PPP may not be a fail-safe solution.
Bitty & Beau’s Coffee, a coffee franchise that employs people with intellectual and physical disabilities, has been co-founder Amy Wright’s pride and joy for years. It opened its first store in 2016 and now has five locations in the South and mid-Atlantic, with their flagship based in Wilmington, North Carolina.
After its operations were shut down due to COVID-19, the company received PPP funding in early April. It was singled out as a prime example for the federal program’s success, earning Wright a trip to the White House.
But the loan money, which was intended to carry her business through the shutdown, has been spent. Now, Wright says their sales are down 90%.
She said she used the loans to keep her 120 employees on payroll, and pay off rent and utilities for their facility during eight weeks of the shutdown. She said now she’s had to lay off half of her employees.
“There's a sliver of me that was hoping that we would prove everybody wrong and this would be the one place that people would just pour back into,” Wright said. “But the reality is, it's still a scary time.”
While people like Wright used the funding to keep their businesses afloat, there are fears that others may be using the loans fraudulently.
Former “Love & Hip Hop: Atlanta” reality star Maurice Fayne, who goes by the stage name Arkansas Mo, received more than $2 million in PPP funding for his transportation company.
Federal authorities allege he spent more than $1.5 million on himself, buying fancy jewelry and leasing a 2019 Rolls Royce.
He was arrested on federal bank fraud charges in May, and denies using any of the PPP loans to pay his personal debts and expenses. His attorney said Fayne should be the least of everyone’s worries.
“I certainly am not commenting on his defense because that is the subject of a criminal investigation,” said his attorney Tanya Miller. “We really need to be looking at why it was that some individuals in connection with larger corporations, were able to pay back money and continue on with their life and other individuals are on the opposite end of a federal indictment.”
Critics say part of the problem is there isn’t enough transparency on who is receiving these funds and how the money is being spent.
Congresswoman Katie Porter, D-California, who helped sponsor the CARES Act said “the reality is we don't know how many businesses may have gotten PPP funding who shouldn’t have or don't need it, because we don’t have the data.”
When asked if she felt Congress passed the CARES Act too quickly at the end of March, without fully including enough stipulations, Porter said, “We were having to face the reality that the coronavirus pandemic was unfolding quickly -- cases were skyrocketing -- and I think even at that time it wasn’t fully understood.
“We acted quickly and tried to get those resources out there because we were hearing from small businesses, ‘We can’t make end-of-the-month payments for our payroll in March,’” she added.
Porter said it’s imperative now to have total transparency into who is receiving PPP funding and to have access to data from the program as a whole.
Rosie Torres has yet to receive any PPP funding. Instead, last week, she said she noticed a random $3,000 deposit in her bank account, which turned out to be federal grant money from a separate disaster loan fund she had applied for earlier this year.
At the time she applied, she said she was told the loan couldn’t be fulfilled because funds had run out.
“There's a gap somewhere… It's not being filled to be able to help people,” she said.
Torres said she’s grateful to have this loan, but said it’s only enough to cover one month of expenses and could disqualify her from receiving more money through PPP or other grants.
“We would be hoping for the best to have something that would help us from the government. To not be able to pay it back but just say, ‘OK, you’re going to work for this, it’s a grant. We’re going to help you. We’re going to pick you up,'” she said. “But if not, we’ll just start all over and start from the beginning.”