Hartford Business Journal

HARTFORDBUSINESS.COM | September 12, 2022 25 Michael Lassy, co-owner of Mastercraft Tool & Machine Co. in Southington, said a $150,000 Economic Injury Disaster Loan from the SBA helped him keep his staff of 21 employed throughout the pandemic despite slowing orders. Lassy is repaying his loan without complaint, but for others, a pending end to deferrals is a big worry. HBJ PHOTO | MICHAEL PUFFER Due Date Looming COVID-19 emergency loan repayments a concern for still-struggling small businesses By Michael Puffer mpuffer@hartfordbusiness.com A $150,000 loan from the U.S. Small Business Administra- tion helped New Britain's Crystal Ballroom survive months of a government-mandated shutdown during the COVID-19 quarantines. Alina Wegrzyniak, owner of the family-run function hall and catering facility, said she is grateful but also worried about the end of a 30-month deferral period in October. She's due to begin making payments at a time when unprecedented challenges have spilled out of the pandemic, including inflation, rising commodity prices and labor shortages. "It is a lot of money," Monika Wegrzyniak, Alina's daughter, said. "We have energy bills. The gas and the food prices are killing us right now." The SBA's Economic Injury Disaster Loan program allowed businesses to borrow up to $2 million at 3.75% interest for 30 years. As of April 27, the SBA logged 38,000 Connecticut loans under the program, amounting to more than $4 billion. The ability to push off repayments will come to a close in October for the earliest EIDL borrowers, and while the program proved a critical lifeline for many companies like Wegrzyn- iak's, there are concerns that the end of the 30-month deferral period — which was extended previously — could push many still-struggling businesses closer to the edge. Amid those fears, some, including U.S. Sen. Richard Blumenthal (D-Conn.) are calling for even more forbearance. "As Connecticut emerges from the debilitating losses caused by the pandemic, the Small Business Administration must consider extending the forbearance period to allow businesses more time to recover," Blumenthal told the Hart- ford Business Journal. "I also urge the SBA to take all administrative steps available to provide additional assistance to the small businesses that need it." EIDL loans were issued to a wide Even so, Bruce Adams, president and CEO of the Credit Union League of Connecticut, said lenders are hearing concerns about the pending end of EIDL deferrals from borrowers who anticipate trouble paying off other loans as a result. "How big of a house of cards is going to fall if this expiration of the deferment period doesn't get extended?" Adams asked. William Moore, president of the Greater New Britain Chamber of Commerce, said an increasing number of his members are raising concerns about EIDL repayment. The Greater New Britain Chamber itself depended on a $126,400 SBA loan during lean times while members struggled to pay dues and fundraising events were impossible. The chamber also widely broadcast the availability of the EIDL program, Moore said. "We really cleared the decks to make sure we were informing every- body this was out there, but also letting them know it is a loan and loans have to be repaid," Moore said. Moore said he is advising members concerned about EIDL repayment to reach out to the federal delegation. Karen Blacik, a principal with accounting and advisory firm CliftonLarsonAllen LLP, said she is counseling restaurant clients to "look under all the couch cushions" for ways to stock up capital for coming challenges. That might mean running with a leaner staff, carrying less inventory or renegoti- range of businesses, from property managers to dentists. An adult novelty store in Hartford received a $150,000 loan. Much of the concern being raised about repayment is coming from the hard-hit service industry, including restaurants. "There's always a new challenge making it difficult for restaurants to get back on their feet," said Scott Dolch, president of the Connecticut Restaurant Association. Dolch pointed to National Restau- rant Association data showing that, among restaurant operators continuing to use deferrals, only 23% anticipate being able to repay principal and interest on EIDL loans. A further 46% say they could pay principal, but not 30 months of accrued interest. Dolch said he is working with federal officials to try and find a way to at least soften the repayment burden. "Our strategy on EIDL is trying to work with the federal government to lower or eliminate the interest rate for a short time for those making payments on the principal," Dolch said. 'House of cards' The SBA's Economic Injury Disaster loans were processed through the agency, not private lending institutions like the more well-publicized and forgivable Paycheck Protection Program loans. Karen Blacik Richard Blumenthal Scott Dolch

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