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Since the coronavirus swept into Silicon Valley last spring, Denise Russell’s race to save her San Jose salon has stretched into a marathon. It started with a $103,020 Paycheck Protection Program loan. Then came a federal small business Economic Injury Disaster Loan for $159,000. Now, she’s applying for a $15,000 state grant and another PPP loan — all while fighting the state for delayed unemployment payments.
“They make it so complicated,” said Russell, whose Special FX Salon & Day Spa was closed for seven months in 2020. “They’re constantly changing the rules. I mean, it’s a nightmare.”Russell spent thousands on medical-grade sanitizer and a parking lot salon, but she only brought in around $350,000 of the more than $1 million in revenue she expected last year. Across the state, business owners staring down similarly daunting numbers warn of an “extinction event” that could claim a third or more of small businesses, with service sector employers and those owned by women and people of color at highest risk.
Amid winter closures triggered by record virus cases, California kicked off an unprecedented small business rescue plan. Federal loan programs have already injected more than $83 billion into California businesses, and the state is rolling out its own grants, loans and tax relief. Still, business owners warn that it’s not enough, especially after widespread technical glitches and confusion about eligibility, programs that have at times favored bigger companies and nagging questions about interest or funding restrictions.
“These are unheard-of numbers when it comes to cash for small businesses,” said Mark Herbert, vice president of California operations for national advocacy group Small Business Majority. “But it’s also important to understand the scale of the need. ”
A $4.5 billion relief plan
Beyond high-profile clashes over pandemic reopening rules is a fundamental question that has vexed state and federal officials: whether to inject more direct aid now, hopefully staving off mass commercial evictions and bankruptcies, or focus on longer-term economic stimulus.
With his $4.5 billion Equitable Recovery for California’s Businesses and Jobs budget plan, Gov. Gavin Newsom aims to do both. Among the proposals: $575 million in cash grants, $630 million in tax relief and $135 million in low-interest loans. The administration included $1.5 billion for zero-emission vehicles and $500 million for housing development, contending those funds would spur clean-energy and construction jobs.