Why the government loans did nothing for this SF neighborhood

When Elizabeth Leu applied for a loan from the Payment Protection Program in April to help Fiddlesticks Children’s Store weather the pandemic, she was turned down. There was an error in the way she completed her application and then she quickly found out that the amount of money had run out. Then she applied for the second round and was approved.

She is so grateful that the first round was rejected.

“When I got the money, I hadn’t opened [the store back up] again, ”Leu said. “I stayed there for two weeks until the law was changed from eight to 24 weeks. I didn’t want the clock to start ticking. Looking back, it was great that I didn’t get the money back in April because I would have paid my employees, but nothing would have been invested in the business.


When the loan was first announced, business owners had just eight weeks to use the money (which was primarily for payroll) to get it canceled. In early June, lawmakers extended this deadline and also lowered the percentage of the loan that must be allocated to the payroll from 75% to 60%. Leu uses part of her loan to pay rent for the first time in three months.

For many Hayes Valley businesses, PPP just doesn’t go far enough and ultimately won’t be what will help them survive the crisis.

“In the short term, it’s very useful to offset rent, payroll and other expenses,” Leu said. “But at the end of the day, having been open for a month now, we can finally see how we’re doing and it’s not as good as I had hoped. I think it will be a slow climb through the pandemic. “

She is also concerned about Hayes Valley as a commercial corridor, saying the neighborhood just doesn’t see the usual foot traffic, much of which comes from tourists. She said it has also gotten a lot dirtier since the coronavirus was stopped. “I have never seen Hayes Valley so littered with needles as I have in the past three months,” said Leu. “It makes it difficult to want to continue working in a once prosperous neighborhood. It is no longer a beautiful sunny neighborhood. But that doesn’t mean I won’t stop pulling out my sandwich board every day and trying to get it to work.

Fortunately, it can be opened every day. Indoor retail has been allowed to remain open even as COVID-19 cases increase in the Bay Area, but other small businesses are facing a different reality. Hair and nail salons, barber shops and massage establishments were slated to reopen on June 29, but the reopening has now been suspended with no end date in sight. San Francisco restaurants were supposed to open for indoor dining on July 13, but it’s also on indefinite time. Some counties, like Alameda County, have even had their indoor and outdoor meals closed (and outdoor meals reopened).

Hayes Street Grill has not opened due to coronavirus COVID-19 restrictions for indoor dining. It was one of the companies that received a PPP loan in the Hayes Valley neighborhood of San Francisco.

Douglas Zimmerman / SFGATE

For Hayes Valley Grill, which has been closed since the shelter-in-place order in March, owner Patty Unterman is still deciding whether it even makes sense to use the company’s P3 loan. “We are trying to determine if we can even use it,” she said. “I don’t believe in back and forth. I go to the farmer’s market two to three times a week. Everything is fresh and cooked fresh. This stuff doesn’t taste good in a box. It just didn’t make sense to me.

She said she would probably open for outdoor dining soon, but with a different menu to suit the setting. Although she can accommodate around 40 guests with additional seats in front of the building next door, she wonders how windy and cool Hayes Valley can be in the evenings and if enough people will show up for the opening to have a meaning. “It costs a fortune to run a restaurant in San Francisco,” she said. “Even though we’ve used every penny of P3 and are forgiven, there are other expenses that just aren’t covered. This loan covers maybe a month of expenses. We need to determine if we can get enough people to eat out, eat and drink to make it sustainable. “

In addition, much of their activity came from the surrounding performing arts theaters, which are still closed.

SFJAZZ is one of the companies that have benefited from a PPP loan in the district of Hayes Valley.

SFJAZZ is one of the companies that have benefited from a PPP loan in the district of Hayes Valley.

Douglas Zimmerman / SFGATE

One of those theaters, SFJazz, received a PPP loan in the first round, but spent it all quickly. “We were very lucky. We didn’t know what the future had in store for us at the time, so it was important to our employees, ”said CFO Karen Chreston. “At the time, we thought it would allow us to keep our staff intact and we thought we could open in June. Now we’ve spent the entire loan and it’s all gone to our staff and their benefits. Otherwise, we would have had to put people on leave in March. “

On July 10, the association confirmed two layoffs, 11 holidays and a few reduced working hours and a pay cut on several levels. For now, SFJazz is focusing on virtual concerts.

Isotope Comics in Hayes Valley decided not to get a PPP loan.

Isotope Comics in Hayes Valley decided not to get a PPP loan.

Douglas Zimmerman / SFGATE

The program schedule is running out – the last day for applications is currently August 8 – but some companies have chosen not to apply at all. James Sime, owner of Isotope Comics, said he chose not to apply because the global crisis is affecting everyone and he feels like he’s doing his part by not taking the money. “We did not apply for a PPP loan,” he said. “We have chosen to fight our way and leave this limited amount of money for others. We’re limping along, and hopefully we’ve also helped other small businesses like ours a little bit. “

Desiree Alexander, owner of the DISH store, tried to apply for a PPP loan but was frustrated and quit. Now she has decided to close her store at the end of the month.

Alexander previously had another DISH outpost in Berkeley, which it closed during the last financial crisis in 2008. “I kinda feel like I’ve seen before, have to deal with the owners, renegotiate the rent and the conditions, ”she said. “It’s crazy.”

DISH owner Desiree Alexander stands inside her womenswear store.  She has decided not to use a PPP loan and is closing her store in Hayes Valley.

DISH owner Desiree Alexander stands inside her womenswear store. She has decided not to use a PPP loan and is closing her store in Hayes Valley.

Douglas Zimmerman / SFGATE

She said the PPP would not have served her much as her three employees would likely benefit more from unemployment and they did not want to return to work anyway. Since she couldn’t include her own salary in the request (if an owner’s salary isn’t part of regular pay, it can’t be included), it just wasn’t worth it. “PPP was never going to be valuable to me,” she said. “I’m closing this time because sales have fallen 80-90% in the past four months. You can’t stretch for six months to a year.

She said the changing nature of retail and fashion contributed to the decision to close, as well as the increase in crime in Hayes Valley. She said her store had suffered three attempted break-ins since March.

A pedestrian walks past Alla Prima Lingerie.  It was one of the companies that received a PPP loan in the Hayes Valley neighborhood.

A pedestrian walks past Alla Prima Lingerie. It was one of the companies that received a PPP loan in the Hayes Valley neighborhood.

Douglas Zimmerman / SFGATE

Magic Crystal, the owner of Alla Prima Fine Lingerie next door, said she was determined not to close, but was also very concerned about the neighborhood. “The beauty of Hayes Valley is that it has been a very vibrant merchant community,” Crystal said. “But PPP was a band-aid for most of us. We did not receive the big checks that the big companies did. PPP will not be a panacea for anyone’s survival.

A few blocks from the Mercury Cafe, owner Nick Parker said the P3 loan he received in early May certainly got them through this time, but “honestly we could use more.” He said the loan allowed him to rehire five employees and pay the rent, but the company is still only doing about 50% of its usual business at this time of year. “Without that I wouldn’t be able to operate, but he will run out this month and what happens after that we’ll see,” Parker said. “It was good to help me get through these few months, but what worries me is next winter. It doesn’t look like things are getting any better anytime soon. I saw all these great little businesses shut down and it really shocked me.

Mercury Cafe owner Nick Parker shows off pasture-raised eggs the cafe now sells to client Lindsay Rawitscher.  Coffee is one of the companies that received a PPP loan in the Hayes Valley.

Mercury Cafe owner Nick Parker shows off pasture-raised eggs the cafe now sells to client Lindsay Rawitscher. Coffee is one of the companies that received a PPP loan in the Hayes Valley.

Douglas Zimmerman / SFGATE

Parker said the biggest benefit of the loan was that businesses were able to give the neighborhood a sense of normalcy early in the pandemic, something he often heard from regulars who stopped by.

Crystal, whose store is one of the oldest in the neighborhood, said she doesn’t know what Hayes Valley will look like in the future. “The PPP case was a joke; it left you desperate and futile, ”she said. “Even if you can survive this first wave, do you want to be the last one standing in an abandoned street? “

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Tessa McLean is a digital editor at SFGATE. Email her at [email protected] or follow her on Twitter @mcleanessa.

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