LOS ANGELES — There is more federal aid available for small businesses hurting because of the pandemic, although some of these loan programs have become targets for criminals.
Sender One Climbing is one local business to benefit from the federal aid available. Alice Kao is the owner of the business, which has locations in Orange and Los Angeles counties.
A mother of two, the business owner stood to lose a lot at the beginning of the pandemic.
“The governor said it might be two weeks that we’d be closed. I knew it was going to be longer than two weeks, but I didn’t think it would be 11 months,” said Kao.
For her business to climb this high in just a few short years only to free fall was heartbreaking for Kao. Then she was able to find more than $1 million through emergency loan programs backed by the U.S. Small Business Administration. It felt like she was finally regaining her grip, even though the risk did not totally disappear.
“In order to take on SBA loans I’m personally guaranteeing the loans so if this doesn’t work out I’m sleeping on the street. They have my house,” said Kao.
While some funds have been used up, others, such as the SBA’s COVID Economic Injury Disaster Loan (EIDL) program, remain open, already having distributed close to $259 billion.
With so much money going out so quickly, fraud mushroomed. The Paycheck Protection Program was designed to be forgiven if borrowers followed the rules. That offer was enticing. So much so that the Justice Department has charged nearly 500 people with improperly claiming hundreds of millions of dollars targeting this and other programs.
Money taken by scammers could have gone to help more people like Kao.
Veronica Pugin, the senior adviser to the SBA’s Office of Capital Access, says they’re adding more layers of verification and using more loan officers because the one thing they can’t do is work slower.
“We can do both. We can implement secure fraud controls and also get people the funds they need when they need them,” said Pugin.
Now customers are back and Kao sees a way forward.
“It’s a little scary, but I think that all we can do is do our best every day,” said Kao.
The COVID EIDL program is open until Dec. 31.