New businesses report trouble getting approved for coronavirus relief funds

Business

AUSTIN (KXAN) — William Pinson had been at the same company for 22 years, specializing in electronic product development for the oil and gas industry and aerospace engineering industry. After all that time, he said he often felt like a consultant at his own company.

“Other more junior engineers would come and see me,” he said.

A large round of layoffs at his company left him jobless for the first time, but he turned his troubles into an opportunity. He decided to launch his own technical consulting firm and almost immediately landed contracts with two large companies.

“I got to thinking, ‘I could help a lot of people,'” he said. “Looked like I was going to be loaded up for 45 to 50 hours a week, maybe more. Maybe even a little travel?” he said.

In January of 2020, his business was officially formed.

Then, just weeks later, the coronavirus pandemic brought everything to a halt. With his work so closely tied to the oil and gas industry—both hit hard by the economic shutdown—he lost the two contracts.

“When you have an industry that has a drop in consumption of 50% or more, that has an effect,” he said.

He needed help, and so he applied for the Wilco Forward grant program—funds available from approximately $93 million the county received from the CARES Act. Pinson said he followed all the instructions and provided the required documents, which were different for a newly-formed business.

Still, at the end of May, he received notice his application was denied. He worried about how many other Williamson County businesses found themselves in the same situation.

“Williamson County has been growing and with that growth comes new businesses. Anything from little guys like myself who work out of their house to larger companies or start-ups,” he said. “It just seemed unfair, you know?”

At the time, the Williamson County Treasurer Scott Heselmeyer told Pinson in an email, “The situation that you have encountered has been experienced by a few applicants. It is extremely difficult to verify business net income numbers for new businesses that have only been in operation in 2020 and have no payroll. Unfortunately, it looks like that has resulted in some inconsistency in how these particular applications have been handled.”

He went on to say they identified the applications that experienced this problem and were reviewing the situation.

Then, Pinson said he never heard back.

The approval process

When KXAN reached out to the county to inquire about the approval process for new businesses, a spokesperson said they did provide “several grants” to businesses that were opened in late 2019 or early 2020. 

The Auditor’s Office processed 4,194 grant applications in total. Of those applications, they denied 466 applications for being duplicates, the business not being located in the county or the applicant failing to provide “proper documentation.”

“There was certainly a consistently-applied process for working through the applications from these businesses,” the spokesperson said in an email. “Some new businesses had challenges meeting the criteria.”

She noted situations where sole proprietors who had no payroll expense to show, no positive net income to report and no eligible fixed costs—especially if they operated out of their home. 

“Although the Auditor’s Office worked extensively with these businesses to secure the proper documentation, some businesses failed to provide that documentation,” she said.

Yet, Pinson said he didn’t think he had missed any forms, and since he never heard back from the county, he wouldn’t have known otherwise.

He said, “You’ve got new businesses that falter or even close because of this technicality? That’s not good.”

The county spokesperson went on to say it was “necessary to set up parameters for the program.”

She told KXAN, “Although Williamson County was the smallest local government to receive direct funding, our program has become a model for other local governments throughout Texas and the country.”

Small business relief around Central Texas

We also took a closer look at other small business relief grant program in the area.

In order to qualify for the Travis County Thrive Program, a business had to be in operation on or before March 1, 2019—meaning zero brand new Travis County businesses were awarded the funds.

In Austin, 42% of applicants for their small business relief grant program were in business for less than five years when they applied. Only 12% of those new businesses received grant money.

The spokesperson for Williamson County reiterated they are doing everything they can to provide as many grants as possible to their local businesses.

“A very small subset of new businesses who were not in business in 2019 and who had no employees had challenges documenting income upon which we could base a grant,” she explained. “During the course of the program, we adapted our system to help these businesses provide us with income documentation so we could provide them with grants.”

Second chance

After KXAN began asking questions about Pinson’s application, he was informed the auditor’s office would take another look at his case.

An email from the County Auditor state, “We realized later in the process that we did not have a good system to allow those “new” businesses who opened in early 2020 to show us they had Net Income. After you were denied, I was provided another tool to possibly help those in your situation.  I am happy to provide that opportunity to you, and I hope it works out for you.”

He noted the corrective process was instituted in June, after Pinson was originally denied. He asked Pinson to provide a few additional documents now, to see if he qualifies.

Pinson said he’s grateful to the county for the second chance and hopes other applications get another look, too.

“I’m just one guy, but I know there are more people out there that are impacted by this,” Pinson said, adding he hopes their applications get a second-look as well.

KXAN’s Avery Travis will have more on this story Monday night at 6 p.m. on KXAN News.

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