Small business owners in Central Virginia worried about starting to pay back federal COVID disaster loans

Small business owners in Central Virginia worried about starting to pay back federal COVID disaster loans

HENRICO COUNTY, Va. (WRIC) — Restaurants are just one of the many industries in Central Virginia that are struggling to stay open, even after the pandemic. Now, their top priority is to start paying back federal COVID-19 disaster loans as the deferral period comes to an end soon.

Rob Thompson, the owner of the Eggs Up Grill in Chesterfield and Henrico counties, said it was tough opening up two restaurants in the middle of a pandemic.

“We struggled our first six months with staffing,” Thompson said. “I did 96 interviews over the telephone and four people would show up in person and I would hire two.”

He said rising inflation and supply and staffing shortages have created challenges for business owners. 

“Inflation has just been the bane of evil for the small business restaurants,” Thompson said. “We don’t know the prices. They change every Sunday. A year ago in January, I paid $41 for a case of eggs. This past Sunday, I paid $97 for a case of eggs.”

At the height of the pandemic, many small business owners took out an Economic Injury Disaster Loan (EIDL) from the United States Small Business Administration (SBA).

The program allowed borrowers to receive up to $2 million with 3.75% interest.

Erik Terry, president of the Virginia Restaurant, Lodging and Travel Association, said business owners who are struggling to stay open are worried about starting to pay it back.

“Unfortunately, most folks are just not prepared for that,” he said. “That’s really the majority of the struggle that they’re incurring — is just trying to keep up with costs.”

Terry said about 20% of Virginia’s restaurants closed during the pandemic.

“We’re going to see some close right now. Many restaurants are just realizing that they’re just not making any money in this current environment,” Terry said.

Though Thompson didn’t take out a federal disaster loan, he did receive an Employee Retention Credit two weeks ago, which helped him out a lot.

“It was a welcome boost to the bottom line,” he said.

Terry said the National Restaurant Association has asked the federal government for a delay on the disaster loan payments and interest, but they’re still waiting to hear back.

The SBA said after the deferment period ends, COVID-EIDL borrowers will be required to make regular principal and interest payments beginning 30 months from the date of the note.

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