Los Angeles, CA—The Coronavirus Aid, Relief and Economic Security (CARES) Act, signed into law on March 27, includes provisions that are bringing welcome relief to recording studios forced to shutter in the face of the coronavirus pandemic. And while there has been criticism of the application process for the hastily rolled-out program and its initial stumbles, funding finally appears to be on the way.
The principal vehicle for relief is the Paycheck Protection Program, or PPP, which offers loans to small businesses that will be forgiven providing that at least 75 percent is used, as the name suggests, for payroll. Funding is intended to cover eight weeks of expenses.
While precise figures are hard to come by, it does appear that the Small Business Administration (SBA), which is overseeing the various relief programs with the U.S. Treasury Department, had approved just over four million loans by May 8. (There are 30 million small businesses nationwide.) According to SBA data, nearly three-quarters of the loans have been for less than $150,000. A National Federation of Independent Businesses survey found that 61 percent of small businesses had received their loans by May 8.
Stephen Marsh of Marsh Mastering, a home-based facility in the Hollywood Hills, reports that he had enjoyed a good start to the year. “So I held off and didn’t apply right away,” he says, instead paying his two employees out of his pocket.
Plus, Marsh says, the application was estimated to take over two hours to complete. What with work, learning to become a kindergarten teacher for his son and taking care of household chores, he didn’t have the time: “We’re all juggling a million balls.”
But as the lockdown stretched on, he bit the bullet. After being rebuffed initially by his bank of more than 15 years, he received an email from PayPal about its LoanBuilder service. “It was a two-page online form, and the documentation requirement wasn’t so great,” he says.
By then, the first round of funding had run out. But after Congress appropriated money for a second round, PayPal notified Marsh that the SBA had accepted his application. “It wasn’t a ton of money in terms of the scale of my business overall, but in terms of my ability to keep my employees covered, it’s huge,” he says.
“We started getting our ducks in a row even before they said there would be a PPP. We wanted to be ready,” says Dave Trumfio, who, along with his wife Ronna, owns and operates multiple studio locations in the Los Angeles area. He applied on the very first day and was soon bogged down in bank bureaucracy and the application process.
After attempts with two different major banks got him nowhere, Trumfio says, he applied through a small private bank at the suggestion of a friend in the financial sector. “The bank helped us apply and we got approval the first day, basically, in the second round,” he says.
Most of his engineers are independent contractors, says Trumfio, not employees. “The PPP covered the limited payroll. It doesn’t cover our mortgage or our regular overhead. But we plan on using it fully for payroll so we can get the full loan forgiveness.”
Since PPP includes Trumfio and his wife, he says, “It helps with our house and health insurance. But we haven’t had much relief for our business.”
That said, they’re getting by, thanks in large part to their month-to-month clients with private studio lockouts. “Fortunately, the way we structure our business, the month-to-month rooms cover the basics. So we’re just barely breaking even.”
One of the Trumfios’ facilities was already funded through an SBA 7(a) loan, the agency’s principal small business program. “They’ve given us some relief on that loan,” he reports, separately from the PPP.
Trumfio’s experience with the two large banks left a sour taste. “For a true small business like a recording studio—a micro-business compared to a lot of businesses—I’m ready to put all my apples into a small private bank,” he says. “We’ve already started looking at moving our accounts to a small bank here in L.A.”
With no employees, Paul Horabin and Sarah Taylor, the husband-and-wife team behind ReadyMix Music Recording Studio in North Hollywood, have had to look to programs offering relief for the self-employed. Horabin initially applied for the SBA’s Economic Injury Disaster Loan (EIDL) program, which offered a $10,000 loan, then fell afoul of the PPP’s constantly evolving regulations. “They moved the goalposts,” he says.
He got up at 6 a.m. to apply for the Pandemic Unemployment Assistance (PUA) program when it went into effect on April 28. “It took forever with the crashing website,” says Horabin. “I got a letter on May 6 saying I qualified for PUA, and that I qualified for them to add on the federal $600.” The CARES Act provides an additional $600 per week for all eligible unemployment compensation beneficiaries.
Horabin has yet to see any funds, he says. Meanwhile, Taylor, who applied a day after her husband, is currently in limbo following some back-and-forth with the agency over her work history, they report.
The pair had already stocked up on sprays and wipes before the virus arrived. Immediately before the lockdown, recording artist Ledisi, her videographer husband and a stylist spent a day at ReadyMix filming a music video. “They all had masks and gloves,” says Taylor. As businesses are permitted to open back up, she says, “I’ve got to see how we do that, and how many clients are okay with it.”
“We were paying attention in the weeks leading up to the shutdown. Ronna made a bunch of DIY sanitizer,” says Trumfio. Now, he says, “We’re talking about protocols for when we do open back up.
“We’ll put microphones into rotation and clean them. We’ll have a sign-in sheet. And we’ve ordered a bunch of UV technology,” standard equipment in medical facilities that can help break down bacteria and germs.