America’s small businesses are racing against the clock to survive the economic devastation wrought by the coronavirus pandemic as they await hundreds of billions of dollars in federal loans.

Many firms are still struggling to apply for the money as they face technical glitches and confusion about lending terms. Hundreds of thousands of others have gotten approval but still haven’t received funding. Still others are hesitant to apply without knowing what their businesses will look like when the outbreak eases and they reopen, possibly by summer.

Meanwhile, the clock is ticking and their cash is dwindling.

“I think it’s really dicey for all small businesses right now,” says Amanda Ballantyne, executive director of the Main Street Alliance, a small business advocacy group. For many with fewer than 25 employees, “It’s really like days, not weeks” before their cash reserves are depleted.

About half of small employers can survive no more than two months in the current environment, according to a recent survey by the National Federation of Independent Business.

The pandemic has forced at least the temporary shutdown of restaurants, stores, movie theaters, hair salons and scores of other businesses across the country.

Casey Gray recently shuttered his Dallas area martial arts academy, called 360 Jiu Jitsu, and laid off all five employees. Although Gray’s landlord deferred his April rent payment, he has enough cash to last just 15 to 25 days. Gray is thinking about applying for an SBA loan but is wary.

“The economic fallout could last a while, and the amount of members that lost their jobs was significant,” he says. “If I open back up, I’m not going to have anything close to what I had before. I don’t want to overextend myself and not be able to pay my loan and be in a worse position that I am now.”

For now, Gray has shifted his classes online, but it’s not clear how much of his $30,000 in monthly revenue he can replace. He’s thinking about getting a job in a grocery store but has asthma and is worried about contracting the virus. He, his wife and two children have no health insurance.

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The CARES Act relief package passed by Congress features a $349 billion Payment Protection Plan that provides businesses with fewer than 500 employees loans of up to $10 million for operating expenses. The bank loans are fully guaranteed by the Small Business Administration. As long as the firms keep their employees – or rehire those laid off – and 75% of the money is used for payroll, the loan amount covering eight weeks of their costs is forgiven. But anything above that must be repaid.

The PPP is intended to keep businesses and workers connected, in part so the economy can recover more swiftly when the outbreak passes. But about 17 million workers already have been laid off or furloughed in just a few weeks, according to Labor Department tallies of unemployment benefit claims. It’s not clear how many of the workers will return to their former employers.

SBA loans off to rough start

Seventy percent of small businesses have at least tried to apply for the PPP loans after the program was set up in record time on April 3, according to an NFIB survey conducted April 6-7. Yet many applications could not be processed because of overwhelming demand. Many businesses were confused about the terms of the loan forgiveness, Ballantyne says. And some banks set strict limits on who could apply.

Katherine Tepper-Marsden, owner of the Glassmith in Austin, Texas, says sales at the glass pipe and tobacco shop have fallen about 80% and she has furloughed her two part-time employees. She sought a PPP loan through Bank of America, her longtime bank, but was told she wasn’t eligible because she doesn’t already have a lending relationship with the bank and has a credit card with another bank.

She has turned to a credit union instead but meanwhile missed a payment on her American Express card and maxed out her credit limit.

“It’s frustrating to see a bank as large as Bank of America try to limit us,” she says. “I’ve never missed a credit card payment, and now I have to put my credit at risk.”

Bank of America spokesman Matthew Card says the bank has received more than 315,000 applications for more than $45 billion in loans.

"We know for these businesses, speed is of the essence," he says. "Our decision to prioritize lending to clients who do not have lending relationships with other companies is an effort to direct resources quickly and efficiently. When a financial institution already has information about a client, it streamlines the application process, meaning more loans can be processed faster."

Waiting for the cash

Some of the kinks in the PPP program have been at least partly ironed out. About 587,000 loans have been approved for about $151 billion, according to the SBA. Yet just a fraction of the money has gone out, according to Ballantyne and Ami Kassar, CEO of MultiFunding, a small-business loan adviser.

Business owners are confused about when loans must close, Ballantyne says. And many banks simply don’t have proper closing documents or systems in place to get the money to the borrowers, Kassar says. He believes the cash will be disbursed in greater volumes starting next week.

The SBA “got (a lot) of applications,” Kassar says. “Let’s give them some credit.”

Another program that can tide businesses over in the meantime is beset by other troubles.

The Economic Injury Disaster Loan (EIDL) program provides emergency grants of up to $10,000 – theoretically within three days – and low-interest loans up to $2 million.

But that program has seen overwhelming demand, and borrowers are not getting the money quickly as intended, Kassar says. As of Friday morning, nearly 4 million businesses and non-profits have applied for EIDL funding for a total of $383 billion, according to the SBA. Congress, though, has allocated just $17 billion. The shortfall has led the SBA to cap the amount of money the agency can give out in loans to just $15,000 per applicant (in addition to the $10,000 grant).

Juggling loans

Matt Doll, CEO of American Fire Glass, based in Elsinore, California, laid off about half his 27 employees as sales fell about 65%. The maker of outdoor fire pits was fortunate to receive the $10,000 emergency grant. But “that won’t make a dent” in Doll’s $300,000 in monthly expenses, including inventory and shipping costs, he says. He also sought a $1 million EIDL loan but was told that program is now capped at $15,000.

So Doll also has applied for a several-hundred-thousand-dollar PPP loan to rehire employees and pay rent. Without that money, he says his business can survive about six weeks. If sales eventually do return to normal, Doll worries he may not be able to rehire his employees.

“You’d have to start from scratch,” he says. “It will slow production and output."

Other small businesses are befuddled by the loan process. David and Danielle Hodge closed their restaurant, Siciliano Subs, in Evansville, Indiana, a couple of weeks ago and laid off their four part-time employees.

“I am afraid that I will not have enough money to pay rent next month and place a food order,” David says. “I am praying we can get through this as quickly as possible so I can reopen. There is also a huge fear of reopening but people not being able to afford to come to eat at Siciliano’s because they are struggling financially.”

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Yet the Hodges have balked at applying for an SBA loan.

“We are confused with the process, and we have no idea who we are supposed to ask to clarify questions,” David says. “There are too many what-ifs factors that scare us. We barely make it month to month, and what if I have to pay (the loan) back?”

Contributing: Ledyard King; Coral Murphy and Aimee Blume of the (Evansville, Indiana) Courier & Press

This article originally appeared on USA TODAY: Coronavirus: Small businesses scramble to secure federal PPP loans