AUSTIN (KXAN) – In January, Michael Bajec opened “The Lucky Duck” — now, he’s trying to keep his East 6th bar afloat.
“We’re just in survival mode,” he told KXAN.
Bajec said he requested and received an application for Austin’s Economic Injury Bridge Loan program, but was among the overwhelming many who didn’t complete and submit it.
The deadline to apply was Friday. The city said Monday it received 127 applications but had heard more than 1,000 inquiries from struggling businesses.
“I can name several businesses that have not even bothered because it’s not worth the effort and could be costly in the end,” said Bajec.
The local loan is designed as a stop-gap to help businesses keep employees until they receive emergency funds through the U.S. Small Business Administration Economic Injury Disaster Loan Program.
Struggling businesses can get a bridge loan up to $35,000. They have to pay that money back when they get their Federal loan or within 12 months, whichever comes first.
As of Friday’s application deadline, $648,000 in loans had been approved for 20 small businesses, out of the total $5,672,527 allocated. The city is still processing a large number of applications.
Bajec says the problem is, the Bridge Loan deadline passed before he and many business owners knew they’d have the means to pay back the money they would have borrowed.
“[The Bridge Loan] becomes useless if we don’t get the federal one,” he said.
The struggles and delays small businesses have faced getting SBA loans is well-documented.
Bajec applied for his in early-March and is still waiting.
A city employee had told Bajec over email that because the bridge and SBA loans were independent, he couldn’t guarantee Bajec would be approved for the SBA Loan before the city one.
“They advised us we could wait to see if we could get the federal loan, but if we’re waiting for the federal loan, then there’s no point in getting the city loan to begin with,” said Bajec.
KXAN began looking into why so few businesses were applying for the bridge loans last week.
The city has maintained the conditions and use of bridge loan funds is tied directly to U.S. Small Business Administration guidelines as approved by HUD.
For further clarification, we reached out to the U.S. Department of Housing and Urban Development.
“The City set the lending terms for the small businesses and the application deadline,” a Senior HUD Official told us. “HUD sets the ‘terms’ that the activities have to be eligible for Section 108 and meet program benefit requirements.”
We followed up with the Austin Economic Development Department regarding concerns about the city’s May 8th deadline. We’ll provide the city’s response when we receive one.
“Given this more narrow focus and the depth of need, the City is considering grant programs for small businesses,” a spokesperson did tell us on Monday.