Emergency Fund Helps R.I. Businesses Cope
By Sarah Sparks
WASHINGTON – As small businesses in Rhode Island feel the fallout from last month’s terrorist attacks and the continuing economic uncertainty, the state has started a half-million-dollar fund to help them keep their heads above water.
“Given the emergency nature of this, we had to do something quickly,” said Tom Schumpert, executive director of Rhode Island Economic Development Corp. (RIEDC), which operates the fund. “Most small businesses are like you and me, they live on cash flow. When it dries up, you miss pay periods, and people don’t get paid. This will bridge the cash flow gap for these companies.”
The reasons for businesses’ financial difficulties range from the ordinary – nervous customers, travel limitations – to the insidious, such as persecution of Middle Eastern business owners.
“Oh, yes, it’s affecting us,” said Deeb Tannous, owner of the Mineral Spring Avenue Getty gas station in North Providence. “People walk by and yell, ‘This is an Arab station; don’t gas up here!’ ” Tannous said. “I’m not an Arab; I’ve been in America nearly 22 years, since I was 19 years old.”
Tannous, who is Lebanese, has been harassed and boycotted since the Sept. 11 attacks. “We have a flag in the window. Earlier this week a man going up the street said, ‘Put more frigging flags in the station.’ He was giving me the finger.”
Tannous said his business is down by 500 gallons a day from its normal 3,200 gallons, even after lowering his price to $1.25 per regular gallon, the lowest on the street.
So far, Tannous and 10 other Rhode Island small business owners have received help from the RIEDC, in the form of both loans and organizational assistance by the group’s financial advisers. The RIEDC started accepting applications a month ago, and about 40 businesses have so far applied for loans, Schumpert said, with most of the initial loans going to travel and tourist-related businesses.
Each company can apply for a loan of up -to $15,000, with interest rates 1 percent below the prime lending rate. For the first year, businesses are permitted to pay only the interest, but must pay the entire balance in the form of a balloon payment at the end of the 12 months. The fund is capable of providing 33 to 100 loans, depending on the size and number of loans requested.
Less than a third of the money from the emergency fund has been paid out, but Schumpert said the RIEDC is already planning the next phase of funding. “We’ve been in touch with the Rhode Island banking community to invite them to participate. · This was so sudden, we haven’t had time to sit down with them yet,” Schumpert said.
The RIEDC has also contacted the Economic Development Administration at the U.S. Commerce Department for possible federal assistance. Sen. John F. Kerry, D-Mass., and Reps. Don Manzullo, R-Ill., and Jim Moran, D-Va., this month also introduced small business emergency relief legislation that could provide more money to small businesses.
To be eligible for one of the emergency fund loans, applicants must provide personal and business financial statements, personal and business tax returns, their most recent interim business financial statement, and proof of insurance for the business. The owner also must fill out a one-page application and give evidence of how the attacks have harmed the business.
Eric Weiner, owner of All Occasion Limousine in Providence, says his fleet’s odometers should be proof enough. “October is usually a banner month for us, 45 to 47 trips a day, but now we’re down to about 30 a day,” said Weiner, who received a $15,000 loan.
All Occasion, which was built around shuttling business travelers to and from airports, saw a 60 percent drop in business in the three weeks after the terrorist attacks. It has crept back up about 20 percent during the past 15 days, Weiner said, but because there is still “a gaping hole” in the downtown Manhattan limousine market, “a lot of our business travelers just don’t have any place to travel to,” Weiner said.
Howard Reynolds, owner of Boulevard Travel in Pawtucket, agreed. Reynolds said his agency and the travel industry at large was already reeling from the economic slump and airlines’ cutbacks on travel agent commissions before the Sept. 11 attacks.
“This was a triple slam for us,” Reynolds said. Boulevard’s business has been off 50 percent or more since the attacks, and the agency was pummeled by cancellations. “We’ve refunded over $80,000 since Sept. 11, and we’re still refunding.”
And Reynolds, who has owned Boulevard for 20 years, said the company has not gotten much of a breather to regroup. “We’ve been busy, but it’s the wrong kind of busy, the non-profit kind,” Reynolds said. “We’re a service industry, and we had people stranded all over the world. We were getting calls from people we didn’t even sell tickets to. We had tons of those calls.”
Reynolds said most travel agencies cost about $15,000 per month to run, and the $15,000 loan from the RIEDC would help keep Boulevard running at normal levels. “Most businesses in tough times cut back on advertisements, which is the worst thing to do but also at times the practical thing to do. This [loan] means we won’t have to make as many cuts.”
For independent subcontractors like Brian Ray, the loan may literally keep him rolling. Ray, who works under a contract with Best Delivery at T.F. Green International Airport, delivers late or misplaced luggage from flights to their owners throughout New England, as far north as Maine and Vermont. Of about 20 delivery workers, he is one of four full-timers who depend on the deliveries for their living.
In a normal week, Ray would average about 40 deliveries. “Now I’m down to about 20 a week, if I’m lucky,” Ray said.
Ray’s $5,000 loan will go toward car repairs and household bills, he said. “I’m going to try to ride it out until Christmas. That’s our busy season,” he said. “If necessary I’ll find something part-time to carry me through.”
Weiner said his loan also would help the company keep up with car payments and pay its employees while he tries to remodel its business. Weiner has pushed up production of a client newsletter to generate interest, and instead of delivering travelers to airports he now caters to people who don’t want to fly at all. The company has started offering long-distance drives to Montreal and Chicago, as well as the more-standard trips to New York, Philadelphia and Boston.
“We’re putting together some day-trip shopping packages to New York or Boston, with nice dining or theater tickets included,” Weiner said. The loan will be “enough to tide us over,” Weiner said, but added, “There is such anxiety in the market right now. It is just starting to recover, and it’s so volatile right now that it could very quickly fall apart again if anything else happens.”
Reynolds seemed more optimistic. “The travel industry is no stranger to adversity,” he said, citing the airplane crash in Lockerbie, Scotland, and bankruptcies at airlines such as Pan Am that have buffeted the industry in the past. “It’s all part and parcel to the business, but it always comes back · It will come back, it’s just going to take time.”
Tannous, who received a $15,000 loan, said he hoped the xenophobic reactions would die down soon. “I took only enough [money] for a rainy day,” he said. “I’ve had this business 15 years; you’re not going to see the station closed. Some people have a brain, and we’re doing everything we can to let people know it [the attack] has nothing to do with us.”
The following businesses also received loans through RIEDC: Classic Coach Trailing, Inc. of East Greenwich received $15,000; Corporate Air, Inc. of Warwick received $15,000; MJ Enterprises of Johnson received $15,000; Vintage Knight Limo of Warwick received $15,000; Garden City Travel of Cranston received $15,000; Fred Ricci Tool Co. of Cranston received $15,000; and Middletown Cruise and Travel of Middletown received $10,000.
To apply for a loan through the RIEDC, contact Earl Queenan at 401-222-2601.
