For most small businesses, April will be much worse than March


Procter & Gamble’s sales rose 10% in its third quarter, which ended in March, thanks to American consumers stocking up on staples like toilet paper heading into the coronavirus lockdown. That suggests that in April, as the pandemic continues and such products continue to be scarce from local grocery stores, P&G is one of the “stay at home” names likely to benefit even more in April than it did in March.

But many small businesses are seeing the inverse effect: April is going to be much worse financially than March.

Most U.S. states didn’t begin issuing stay-at-home orders until mid-March, so many businesses really only experienced two big down weeks for the month. With some states now extending their stay-at-home orders through May 15, April will be the first full month of social distancing and non-essential business closures. (Another 5.245 million Americans filed for unemployment for the week ending April 11.)

That’s why adding more funding to the government’s Paycheck Protection Program (PPP) for small-business loans is so essential. (The initial $349 billion allotment ran out on Thursday morning.) Many of the small businesses that need the most help didn’t get through in the first round, says OceanFirst Bank CEO Christopher Maher.

“The businesses that were earliest to apply... had the advantages of accountants and attorneys and advisors,” Maher told Yahoo Finance on Friday. “We need more money because the folks that didn’t get through are disproportionately those smallest businesses. They are in some cases minority- and women-owned businesses, and they simply didn’t have the resources or the advice to get in early.”

New Jersey-based OceanFirst got $350 million worth of PPP loans approved by the SBA and has sent $200 million of that out the door, Maher says, but the bank still has another $200 million worth of requests that didn’t get through.

Maher added that many OceanFirst clients “had a pretty good March. It really didn’t start to hurt them until April, and they didn’t jump on this program as quickly as they could have.”

WELLESLEY, MA - APRIL 15: Taylor true value rental equipment store in Wellesley, MA thanks their customers for support on April 14, 2020. (Photo by David L. Ryan/The Boston Globe via Getty Images)
WELLESLEY, MA - APRIL 15: Taylor true value rental equipment store in Wellesley, MA thanks their customers for support on April 14, 2020. (Photo by David L. Ryan/The Boston Globe via Getty Images)

Indeed, of the many small-business owners Yahoo Finance has spoken with over the past two weeks about the PPP application process, a handful specifically cited that March, while down, wasn’t brutal. It’s April that looks brutal.

Comm-Fit, for example, which sells and installs fitness equipment to corporate clients in Texas, saw a 20% sales dip for March—bad, but not devastating—because it had existing contracts in place for deliveries in March. For April, Comm-Fit CEO Seth Gordon says his sales will be down by more than 75%: “Obviously, the commercial customer is shut down right now.” Comm-Fit received a $412,000 PPP loan, but Gordon says, “If this becomes a six-month or 12-month or 18-month issue, this money will only last so long.”

Similarly, Gold Coast Pet Care, a dog-walking business in New Jersey, told Yahoo Finance it still had some clients paying for dog walks in March, but after a few weeks of quarantining, customers went dry, “as things have gotten more scary,” co-owner Josh Klein said.

Gold Coast applied for a PPP loan through Chase on April 8 and didn’t hear back until April 17, when Chase emailed to say that the first round of funds is gone and customers who got a loan approved were already notified.

Daniel Roberts is an editor-at-large at Yahoo Finance. Follow him on Twitter at @readDanwrite.

Read more on the Paycheck Protection Program for small businesses:

The $349 billion coronavirus small business loan program is out of money after 13 days

These 4 businesses that have actually received PPP money have 1 thing in common: small banks

‘Nightmare’: 3 small business owners describe process of applying for PPP loans

Banks were not prepared for flood of small business coronavirus loan applications

Chef Marcus Samuelsson on coronavirus: ‘Where restaurants go away, so goes all small businesses’

Originally published