- The Elzarka family has owned Beninni, a men's formal wear store in Hayward, California, for 30 years.
- The shop was forced to shut down in the
coronavirus lockdown, and has tried and failed to get government assistance loans through the coronavirus relief package. - Shady Elzarka, whose dad founded the store, struggled to access either the
Economic Injury Disaster Loan Emergency Advance (EIDL) and relief from the Paycheck Protection Program (PPP). - Elzarka for weeks heard nothing from the
Small Business Administration , through which he applied for an EIDL, or fromBank of America , where he applied for the PPP loan. - Meanwhile much larger companies did not struggle to access government funding, some of which public pressure forced them to hand back.
- After Business Insider contacted Bank of America for comment, the bank quickly told Elzarka it submitting his PPP application to the SBA due to a "media escalation."
- The SBA also told Business Insider it will "get back to him shortly with an update."
- The Elzarkas still have not received any money.
- Visit Business Insider's homepage for more stories.
One
Last week Business Insider spoke with 27-year-old Shady Elzarka, a Twitter employee who has been helping his father with his clothing store in Hayward, California.
Mohamed Elzarka, 64, immigrated to the US from Egypt in 1981 and opened his store, Beninni, shortly after.
The store, which sells men's formal wear, has been around for three decades, two of which have been spent at its current location in the Southland Mall.
When the Bay Area went into lockdown on March 16, the Elzarkas had to close the store and lay off their handful of employees.
More than three weeks later, lease payments and bills are piling up while the family runs on savings and worries about their ability to reopen the store if social-distancing measures last much longer.
Most concerning is the fact that they haven't been able to get any government assistance.
Applying for the EIDL, then the PPP
Shady, who has a business degree and helps his father out with the store's finances, was initially excited to hear about the government's plan to release loans to small businesses during this hard time.
He first applied for the Economic Injury Disaster Loan Emergency Advance (EIDL) through the Small Business Administration (SBA), which promised a $10,000 cash advance in just three days.
"It was exactly what my dad needed at the time," Shady said.
He submitted all the paperwork directly to the SBA on March 30, but after nearly a month he still hasn't had a definitive answer.
"I've spent hours on the phone and have gotten through to a couple of people," Shady said. "Each of those individuals said all I can do now is wait. There's been no guidance as to when any financial assistance will be given to me."
When he failed to secure an EIDL loan through the SBA, he turned to another government program in the federal coronavirus relief package — the Paycheck Protection Program (PPP).
PPP money is distributed through banks, so Shady applied through Bank of America, the bank his father has used for years.
Shady said he initially worried about getting money through this program, fearing that Bank of America would be inundated with loan applications because it has so many customers.
He was right.
Shady said he waited about a week after applying for PPP before he started contacting Bank of America directly to get an update on his application.
"I would call their different customer lines, I would send private messages on Twitter, I would find any kind of way to contact a representative to get a status update on my loan," he said. "But the only communication has been an email saying I'm missing documents in my application."
Shady said he had read reports of other people receiving this same, seemingly-automated message, and he thinks it's just a way for the bank to buy time.
"I checked with CPAs [Certified Public Accountants] and professionals to make sure I wasn't missing anything and indeed I was not missing anything," he said.
Banks may have prioritized larger clients in PPP applications
He would later find out that the PPP had run out of money — the funding was exhausted after two weeks.
While the funds were meant for small businesses, several successful publicly-traded companies like Shake Shack and Ruth's Chris Steakhouse ended up getting loans through the program, while true small businesses like Beninni missed out.
(Both Shake Shack and Ruth's Chris Steakhouse have both since returned their government stimulus checks, worth $10 million and $20 million respectively.)
Shady says he worries that bigger businesses are receiving "some sort of priority" from the banks, though he thinks ultimately that all businesses that need loans should get them.
The New York Times reported last week that some banks prioritized the applications of their wealthiest clients.
Meanwhile, CNN reported that Bank of America and three other large banks have been sued for failing to give out the loans on a first-come first-serve basis, instead allegedly putting bigger clients to the front of the line to collect larger fees.
The SBA said Sunday that publicly-listed companies are now "unlikely" to qualify for a PPP loan.
'If after four weeks I can't get any money in my pocket for my father, then what has the president done for me?'
Nearly a month into the process, and no closer to securing a loan, Shady says he's starting to lose hope they'll ever get one, even as both PPP and EIDL received a second round of funding on Monday ($320 billion and $60 billion respectively).
The store is his parents' only source of income, so right now they are getting by on savings. Shady is also helping them out financially, but worries about what will happen to the business if the outbreak goes on for much longer.
The family also worries about the store's loyal employees, a few of whom have been working there from the very beginning.
"Why is it such a struggle for me to secure any sort of financial assistance for my dad's business, which is definitely a small business?" he asked.
"I've done every single thing they've asked, on time and early, so why don't I receive any financial assistance?"
While he was initially pleased with the Trump administration's commitment to provide loans to small businesses, the fact that he hasn't received one has left him jaded.
"If after four weeks I can't get any money in my pocket for my father, then what has the president done for me?" he said. "It would be a completely different story today if any of the promises he made were actually true."
He thinks there should be more of a distinction between businesses so that small mom-and-pop shops — like his father's — can easily apply and get approved for the money.
'Media escalation'
After Business Insider reached out to Bank of America for comment on this story, Shady said the bank contacted him due to a "media escalation."
He said it told him that his application was indeed complete and is being submitted to the SBA. He has still not been approved for a PPP loan.
A Bank of America spokesman told Business Insider that they could not comment on a specific client's case, but noted that the bank is processing more than 400,000 PPP applications and that there are "thousands of teammates working around the clock to support this effort."
The SBA told Business Insider that it "will assign a specialist to check on the status of Mr. Elzarka's Economic Injury Disaster Loan application, and will get back to him shortly with an update."
Elzarka said he has yet to hear from the SBA directly.
His family still hasn't received any money for their business.
Read the original article on Business Insider