Small Business Matters: Business moves on to Plan B, C, D …

  • Dennis Boyd

Hawaii’s business community waited quite a while for a trans-Pacific non-quarantine start date, and as we all know that has been pushed back a month — for now. The governor and the mayors were telegraphing this pretty clearly before it was announced, so it’s no surprise and you really can’t blame them. The mainland has unfortunately gone nuts again with infection rates, we’re still not sure how pre-arrival testing in Hawaii would work, and with our limited medical resources, it’s easy to imagine an alarming scenario if COVID-19 took off here at even a fraction of mainland rates. But it is discouraging.

Businesses had hoped, despite the potential risks, that they would be thrown a lifeline with resumption of at least some level of tourism. There is no way but up from here for many local businesses that rely on tourism or that benefit from the tourist dollars local consumers earn via tourism and spend in the kamaaina economy. So, what’s the current business funding situation?


PPP (Paycheck Protection Program) financing seems to have maxed out for Hawaii borrowers, with statewide loan levels relatively consistent since May at around $2.4 billion, indicating that the borrowers who were planning on taking advantage of that program have long since done so. The total sum of Hawaii PPP borrowing has actually decreased slightly since June as some borrowers apparently decided to return previously obtained funds.

The looming deadline at the end of PPP’s initial eight-week period in which borrowers had to use their funding to achieve “forgiveness” to have all or at least some of their loan treated as a “grant” has passed. This period left many business owners sweating it out as they tried to structure their operations to meet the “salary/other expenses” ratio the program mandated for forgiveness. Happily (maybe?) for them, the PPP Flexibility Act extended the “covered period” to up to 24 weeks in which to utilize funds to obtain forgiveness, and reduced the burden of trying to spend at least 75% on salary to a more manageable 60%.

Unfortunately, when you’ve been trying for seven weeks to expend money by the end of eight weeks at the prescribed ratios to qualify for forgiveness, a last-minute reprieve leaves scant wiggle room to get creative with the little money that is probably remaining. The PPP application deadline was also extended until Aug. 8, but waning Hawaii business appetite for that funding as evidenced above really makes that option moot for additional cash infusions into our economy.

The other pot of SBA money, Economic Injury Disaster Loans (EIDL), recently exhausted the sum available for advances, essentially grants that came before the full loan, of which Hawaii had received $79 million as of July 3. Through July 10, Hawaii’s aggregate EIDL levels continued their steady increase to approximately $787 million, and as of this writing, the EIDL portal is still open. Unlike the PPP however, these are true loans, albeit at very reasonable terms, and are underwritten for creditworthiness, so are not available to all applicants. Some businesses, while willing to go after PPP funding hoping they could manage it so that it became a grant, weren’t all that eager to take on additional debt in these uncertain times, and so passed on EIDL funding.

The Federal Reserve’s Main Street Lending program for businesses is up and running after a halting startup, but the only financial institution noted on their website as accepting applications from Hawaii for new customers is Bank of America.

Rounding out potential pots of public funding, but for individuals, Pandemic Unemployment Assistance (PUA) monies will soon be exhausted, presumably pretty much concurrently with much of the PPP money (spent in the initial eight weeks from disbursement), despite the respite an extended forgiveness period offers. So, we’re pretty much primed to go over a financial cliff in very short order absent some additional assistance.

The potential for at least some of that is on the immediate horizon with the $80 million County Coronavirus Relief Fund, $22 million of that earmarked for business and non-profit grants. RFP’s for contractors to administer relief funding are due tomorrow and hopefully, money can begin flowing through them by mid-August, but only in amounts capped at $10,000/business.

The proposed $3 trillion HEROES Act, passed by the House and headed for the Senate, is the next economic buoy to grab hold of. That bill contains a myriad of assistance measures but is enmeshed in politics, so we’ll have to wait to see what comes of it. There is also more than $100 billion remaining in the PPP fund that could be re-purposed.


Not many would have guessed that February’s economic disruption would have no real end in sight as late as July. So, it’s on to Plan B, C, or is it D … ?

Hawai‘i SBDC Network is funded in part through Cooperative Agreement No # SBAHQ-13-B-0048/0001 with the U.S. Small Business Administration and the University of Hawai‘i at Hilo. All opinions, conclusions or recommendations expressed are those of the author and do not necessarily reflect the views of the SBA.

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