HARLINGEN — For Mario Lozoya and his Greater Brownsville Incentives Corp., focus and effort usually involves supporting businesses straddling the border, working to enhance international trade opportunities.
But like other local economic development organizations these days, the GBIC is learning that all business in the coronavirus era, like that famous saying about politics, is local.
“We’ve put a lot of focus on current local business here as we see the COVID-19 impact on small business directly, so we’ve been dealing a lot with that,” said Lozoya, executive director and CEO of the GBIC.
“It’s not unique to our community,” he said. “I think it’s just the issue of working together to create strategy for recovery. How do we get everybody back online? Do we help from a federal standpoint, from a supply chain standpoint? Mitigate some hurdles, if there are any? What are we doing at the state level? What are we doing at the local level?”
Pushing for local
Like Brownsville, McAllen is feeling its way along an uncharted path, trying to help local businesses in both the near and long-term.
Steve Ahlenius, president and CEO of the McAllen Chamber of Commerce, said his agency has partnered with the Monitor newspaper and other publications for ad buys to encourage everybody to shop at locally owned businesses, at least the ones still open.
“We’ve taken out full-page ads in several papers encouraging folks to continue doing business with folks who are still operating, obviously the restaurants,” Ahlenius said. “We’ve got local businesses that even though their brick-and-mortar operations may be shut down because they haven’t been deemed essential, they’re still selling products online, so we’re encouraging people to go and support those local businesses that are still selling online.”
The Chamber CEO said his agency and the City of McAllen have formed the McAllen Business COVID Ignite and Recovery Task Force that is looking into COVID-19’s impact as well as a path to recovery and potential tactics to use to transition back to opening doors to customers.
“And we’re also wanting to establish some programs that might be able to assist businesses in the short-term in terms of a zero-interest loan program and trying to get those up and launched also,” he said.
“We’re looking at the city being involved, the Chamber, the McAllen Economic Development Corp., the McAllen Service Corp. as a kind of a task force to look at how we can in the coming months unroll this thing and get some additional help for businesses,” he said.
In Brownsville, the GBIC’s Lozoya said his agency has reached out to Gov. Greg Abbott for help easing financial restrictions that limit what economic development organizations, or EDOS, can do for local businesses. He said he has been in touch with Adriana Cruz, the governor’s new executive director of the economic development and tourism division.
“We asked for their support in finding flexibilities for maybe a temporary adjustment of the tax code that we can use economic development dollars in a way to help support the recovery of small business,” Lozoya said.
Information is key
In Harlingen, Raudel Garza, CEO of the Harlingen Economic Development Corp., is offering his agency as a clearinghouse for information for local business owners seeking emergency financial and other help that is rapidly coming online.
“Very early on we started a survey that basically kept track of some of the businesses that have been impacted by this virus crisis, and we’ve gotten a real good response,” Garza said. “We got over 120 or so responses in a very short time frame and that helped us understand what the needs are for a lot of these small businesses.
“It has helped us identify businesses that have closed up and have furloughed people, so we’ve been contacting each and every one of the respondents to the survey and basically are acting as resource and financial partners and counselors in trying to get them to apply for a lot of the programs that are out there.”
Financially hit business owners are sifting through the possibilities to keep the bills paid even if their business has closed temporarily or is open but lagging behind normal profits.
Garza said he and the HEDC are pointing local business owners to several of the options associated with the federal Small Business Administration.
He said his agency is working with business owners to navigate what can seem to be an arcane set of rules and guidelines when applying for financial economic disaster assistance, whether in the form of grants or low-interest, long-term loans.
“Obviously a lot of them are concerned about meeting payroll, paying rent, paying the utility bills, and the federal program, the PPP, the Paycheck Protection Program, it was designed exactly for that,” Garza said. “So we’ve been encouraging people to apply for that and that’s through local banks, through the local lenders, so we’ve put out a list of all the SBA lenders in our city as well.”
But not all small businesses have the credit-worthiness to qualify for these PPP loans, and are turned down by local lenders because the risk is too high.
“Every single business we’ve talked to, we’ve been encouraging them to apply for the Economic Injury Disaster Loans through SBA,” he said. “That program, once the application is complete, and that’s the key, it has to be complete because they ask a lot of information, but once that application is complete, within three days or so based on the response and the information submitted, the SBA will issue out a check for up to $10,000 so that its basically an advance on the loan.”
Even if accepted for a loan, businesses have the option of taking it or rejecting it. And Garza said those businesses can keep that $10,000 which would be considered a one-time emergency financial grant.
“If they do decide to go through with the loan, the loans are up to 30-year amortization, so typically SBA is trying to figure out exactly how much they can pay,” Garza said. “They’re not going to try to make it burdensome on people, so small businesses should be able to cash-flow with these loan programs.”
Also last week, Abbott announced another option which drew praise from Garza, the Goldman Sachs LiftFund, which will partner with other community development financial institutions to provide $50 million in loans to small businesses in Texas.
The LiftFund monies will be in the form of loans for payroll and administered by SBA.
Texas businesses are availing themselves of the PPP funds. As of Wednesday, the governor tweeted, the state leads the nation in SBA approvals with 88,434 grants worth $21.7 billion.
No business here in the Rio Grande Valley would ever want to go through the economic challenges the coronavirus pandemic has caused.
Many have been shut down as non-essential, while others are trying to somehow weather the profitability storm and come out intact on the other side.
And some businesses, those with unique and multi-pronged sales strategies, are actually doing better.
“We did a survey and found only 38 percent of businesses are selling online,” McAllen’s Ahlenius said. “But the interesting fact is, those 38 percent that are selling online have seen an 18-percent increase in sales.
“So there’s been that dilemma. Are we shifting from brick-and-mortar to e-commerce? And my response is it’s ‘and/also,’ we’re doing both,” he said. “There’s an opportunity for a lot of businesses that haven’t made that venture into selling online that it’s now time to start looking at that. … So if something goes away, if you lose the ability for somebody to walk onto your store, you still have that opportunity to sell online and that’s something where we see great opportunity.”
In Harlingen, Garza says restaurants that offered more than sit-down dining seem to be succeeding, at least to a degree.
“Some restaurants were better prepared for drive-thru and curbside type of service because that’s what they do,” he said. “Many of the fast-food chains, and even some of the mom-and-pops that do drive-thrus have adapted pretty well to this, but I don’t think that they’re all doing better.
“They’re doing far less sales than what they used to do but they are doing better than some who haven’t adapted well,” he added.
In interviews with economists and business experts up and down the Valley, one thing seems clear: There are a lot more questions than answers about how to navigate the foggy road ahead when it comes to jumpstarting local economies.
Just what the nuts-and-bolts of maneuvering through this recovery are going to be isn’t known, but the McAllen Chamber’s Ahlenius is already weighing options.
The key, he said, is coordinating the as-yet unknown guidelines from the Centers for Disease Control and Prevention, state recommendations and county and city rules on how, when and where businesses can fully or even partially restart operations.
“Hopefully those get meshed up and lined up, because right now if you see some of these other countries that have gone through this and are now on the tail-end of the pandemic, there’s a lot of testing going on as far as temperature, there’s still the social distancing or social spacing that they’re requiring, so what does that mean for a business?” he asked.
“Are you going to have to test people, everybody who comes into your facility if they’re running a temperature?” he said. “Are you going to require folks to wear a facemask?”
Ahlenius also raises questions about businesses that attract customers who are expected to be in large numbers and in close proximity. Think movie theaters, arenas, bars and sit-down restaurant dining rooms.
“So for their business model to work you have to have high density, yet if you still have social-distancing requirements, how do you make that work?” Ahlenius asked. “If you remember right before the lockdown really tightened up, they were saying you could open up half your dining room in a restaurant.
“Are you going to limit it as far as six people into a store at a time?” he added. “There are a lot of variables out there that we don’t know yet, and when I say we, it’s the business community, and we really need to come up with some ideas and guidelines in terms of what we think would work.”