How Veteran-Owned Small Businesses Are Coping During the Pandemic

Rich Holladay, 50, was a command sergeant major with the U.S. Army who picked up scuba diving as a hobby. He and his business partner, Cecil Stout, 64, a retired Marine, decided to create their own business, Waterdogs Scuba and Safety. It provides scuba instruction and equipment sales, rental and repair out of Clarksville, Tennessee.

The pandemic forced the company to cease most of its operations except for offering scuba classes and CPR training for health care professionals over Zoom calls. “This is really hard,” Holladay said. “We don't know what the future holds. In the meantime, we're cutting costs where we can, to continue to operate to the best of our ability. But it's an uncertain future for everybody."

He has several part-time employees, and the six full-time staff members that run the shop “are dependent on us for their employment."

Holladay and Stout applied for an Economic Injury Disaster Loan from the Small Business Administration and a PPP loan. However, though they turned in the application paperwork early, the PPP ran out of money before Waterdogs received any funds.

Serving in the military “helped us to adapt and understand that while you may want reality one way, reality is reality and you've got to cope with it the best that you can. In the military you do that on a daily basis,” Holladay said.

What the PPP application process is like

Since Holladay applied for the PPP loan, it has been replenished with additional funds. Business owners who are seeking help should apply quickly and remain organized.

To be eligible for a PPP loan, businesses are required to have been operating as of Feb. 15 and have no more than 500 employees. Borrowers can request 250 percent of their monthly payroll costs.

Erika Smith, a former dentist who runs D2D Health Management, a doctor-to-doctor consulting firm, helped the veteran-owned Extensive Pain Primary and Urgent Care Center of Nevada file its PPP application. She recommends borrowers first visit the SBA lender finder because not all banks are participating in the program. In many cases, she has found that participating banks prefer for their PPP borrowers to be preexisting customers.

Next, review the borrower application form to know what information needs to be provided. “You can already have that information gathered. So, when you're actually filling out the real thing online, you have your numbers, you know what's going on,” Smith said.

If the company has not filed 2019 tax returns, the SBA will accept a copy of 2018 tax documents. Additionally, it is important to have salary information of employees outlined in a document such as a QuickBooks file. W3 and 940 tax forms may also be required to identify how many people are employed and what they are paid, Sporrer said.

"It's very important to know that going in, so you can get those documents right. Therefore, when you're applying it makes it smooth and easy,” said Smith.

One common mistake applicants make is to list the number of employees they currently have but not the number they had before laying some off, said Andre’ Haynes, founder of the Armed Forces Chamber of Commerce in Las Vegas.

"Because of the error, they're going to receive less money and not be able to fully fund or support all of the employees under a normal circumstance,” he said.

Once approved by the SBA, the borrower has 10 days to close the loan. Then, when funds are received, it is important to keep track of how they're spent.

"As long as 75 percent of the money that you received from the loan went to your payroll, that can determine if it will be a grant or if you have to pay the loan back,” Smith said. “Twenty-five percent of that money can go to rent and utilities."

In response to criticisms that large companies received PPP loans before smaller ones, the SBA said it will review all loans in excess of $2 million “to further ensure PPP loans are limited to eligible borrowers.”