Business owners who relied on Paycheck Protection Program funds to keep going during the pandemic say the forgivable federal loans carried them through the crisis, but the lessons of the last two years have changed the way they think about the future.

“The business is good, PPP got us though, but I’m worried for what comes next, much more worried than I would have been in the past,” says Bev Eitner, the owner of Play Dog Excellent in Red Bank. “Any illusion that I was in charge has been shattered.”

Through two rounds of Paycheck Protection Program loans, more than $13 billion went to Tennessee businesses, with an average loan size of $56,700. The program wrapped up at the end of May 2021, and the forgiveness process is well under way.

“For my clients, we’re at 100% forgiveness, we’re in good shape there,” says George Wilson, the owner of Southern Payroll and Benefits.

Loans under $150,000 are forgivable through a simplified process that requires very little documentation, while loans over that amount require more legwork to show the funds went largely to payroll, says Jay Dale, market president of First Horizon Bank. The most important thing to note at this stage is the 10-month window for applying for forgiveness, he adds.

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Chattanooga business owners got a lifeline from pandemic aid, but remain cautious

“For round one, the vast majority have applied and gotten forgiveness, and we’re now in the middle of round two forgiveness,” he says. “My only advice would be, it’s a very small percentage, but some delayed applying for forgiveness, and if you miss that 10-month window, payments start.”


Life After the Lifeline

For Walter Lindsey, the federal relief funds meant he could pay employees of his security and investigations company, and also carry clients who were slow to pay him during lean times.

“We applied on the first day it opened, a Tuesday, were approved Wednesday, got funded on Thursday, and made payroll on Friday,” says Lindsey, who runs Unity One East from an office on Lee Highway. “Without the first one, we would have been out of business. I couldn’t have paid my employees, so they wouldn’t have stayed around.”

Lindsey sought and received a second round of Paycheck Protection funding in 2021 to carry him through the next phase of the crisis, and now his business has just closed out its best year ever, he says. Business dropped dramatically from 2019 to 2020, but 2021 results were significantly above 2019, he says.

“The second round [of funds], it helped maintain what we had,” Lindsey says. “So many clients still weren’t paying on time. It also gave us the opportunity to buy some resources we needed to help expand.”

In 2022, Lindsey is hoping to grow operations into Georgia and expand his employees from 34 to nearly 100 people, he adds. Now that his clients have largely recovered, they’ve stuck with him and recommended him to others, in part because the relief funds allowed him to be flexible and continue to help them when they were slow to pay, Lindsey says.

He has successfully applied for forgiveness for both Paycheck Protection loans, one for $56,000 and another for $67,000, Lindsey says.

The Paycheck Protection Program (PPP)

The federal pandemic business rescue program delivered more than $780 billion in forgivable loans to fund 10.7 million applications across two rounds that began in March 2020 and ended May 31, 2021.

PPP in Tennessee

* 238,508: The number of Paycheck Protection Program loans to Tennessee businesses through both rounds of the program, from March 2020 through May 31, 2021

* $13,523,299,915: The amount of money lent to businesses in Tennessee through both rounds of the program

* $56,700: Average loan size overall

* 99,579: Loans through the first round from March to Aug. 8, 2020

* $90,088: Average loan size through the first round

* 138,929: Loans through the second round from January to May 31, 2021

* $32,768: Average loan size through the second

Source: Tennessee Bankers Association

“They were in the nick of time, and highly needed,” he says.

For Jerritt Patterson, the loans meant he could hire salon director Tiffany Vargo, who has taken on the extra administrative work involved in keeping his salon on Frazier Avenue afloat. But he was initially hesitant to seek the funding, despite the devastating impact of the 2020 shutdowns on his business, Patterson says.

“I didn’t know what the terms and conditions were, and I said ‘Let’s try to do this without government funding,” Patterson says.

However, it quickly became clear that he would need help staying in business – and he didn’t want to permanently close the salon he’d spent four years building, Patterson says.

“The world literally shut down, so I made sure all of my employees got unemployment, made sure they were all taken care of, and I sat down with myself and said ‘What are we doing here?'” Patterson says. “My stylists had families, kids, livings, I could not walk away from something like that with a good conscience.”

He sought advice from Wilson at Southern Payroll and Benefits, and ultimately applied for both rounds of the Paycheck Protection funding, Patterson says.

“I talked to George and said, ‘I really need help, I need to hire a front-end person. I don’t know if I can do that,’ so I hired Tiffany in and I got the [Paycheck Protection loan],” Patterson says. “I created a job and sustained jobs and made sure everyone was paid.”

In addition, he applied for two Economic Injury Disaster Loans through the Small Business Administration, which are not forgivable, but have a low interest rate and a 30-year repayment horizon.

Vargo has been instrumental in helping to manage all the details of the loans, including getting forgiveness for two roughly $42,000 Paycheck Protection loans, and ensuring the Economic Injury loan money is used judiciously, Patterson says.

“That has stayed in our bank account,” he says. “When we have low months, we use it for payroll. If not, it stays there.”

Vargo stays focused on making sure the money goes to the right uses, and that she understands the details of repayment, which will start later this year, she says.

“It’s always in the back of our minds – it’s not just ‘Yay, free money,'” Vargo says. “We do have to pay this back and use it wisely now.”

But even with the financial support, he’s still in recovery mode, particularly as new variants of the coronavirus emerge, Patterson adds.

“We are better than what we were six months ago and a year ago, but I’m still not 100% whole and don’t know if I’m going to be 100% whole,” he says. “The business I was in 2019 is not the business I am in 2022.”

For Eitner, Paycheck Protection funds covered the gaping hole left in her books when everyone stopped traveling and dog boarding completely dried up at Play Dog Excellent.

Economic Injury Disaster Loans (EIDL)

* Pandemic EIDL loans: 3.8 million loans

* Amount: $316 billion

* EIDL loans in Tennessee: 56,193

* Amount loaned in Tennessee: $4 billion

Source: Small Business Administration

“Boarding was dead for a year,” Eitner says. “A lot of the businesses that went out of business were strictly boarding. There was no need for boarding – everyone stayed home.”

Day care also dropped by half, but demand for obedience training increased as people stayed home and adopted new best friends, Eitner says.

She applied for two Paycheck Protection loans, and received one for $76,000 and another for $79,000. Both of those have been forgiven, and she’s also using an Economic Injury loan as a financial and psychological safety net, Eitner adds.

“I applied for everything I could because I was terrified,” says Eitner, who employs 28 people. “I pursued a second round of PPP, not because I was desperately needing it, but because of that uncertainty factor. I don’t know what’s going to happen next, if there’s going to be another lockdown. The main thing was being able to pay employees that wanted to come to work.”

The business has recovered, and stays 100% booked these days, but now she keeps the Economic Injury money in the bank just in case, Eitner says.

“The business is doing great, but do I have this feeling that tomorrow will be the same? I do not,” she says.


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