The recession has crashed Vinny Vassallo's limo business.
Vincent Limousine, founded in 2004 by Vassallo, a then-laid off factory supervisor, had a growth year in 2019 to $800,000 in revenue from 15 cars and 23 drivers in the Twin Cities and Phoenix.
This year, the recession caused by the pandemic has all but ended business travel, the bulk of Vincent's business.
"I had been paying my bills, making a profit and our people were working and paying taxes,'' said Vassallo.
''Then, travel stopped in March. And I watched my business goes down. I thought I was having a nervous breakdown in April and May.''
Compounding his problems, Vassallo apparently owes the U.S. Small Business Administration (SBA) $10,000 for what he thought was an emergency grant.
Vassallo learned the bad news recently from his banker.
"We've become the bad guy who has to collect from the clients," said Daniel Batten of Drake Bank in St. Paul.
Vassallo actually credits Batten with helping him save the business earlier this year.
That's thanks largely to a $60,000 SBA loan that Batten helped Vassallo get.
But Vassallo is angry with the federal government for sending mixed messages and mismanaging the virus pandemic.
Initially, the government's Paycheck Protection Program, known as PPP, allowed Vassallo to pay employees who were not laid off and typical business expenses such as rent while he worked on a survival plan.
The loan can be forgiven entirely if it was used for payroll and other business expenses.
Vassallo subsequently accepted what he thought was a $10,000 supplemental grant from SBA.
However, Vassallo and many other strapped small businesses are learning from their bankers there were strings attached.
The SBA considered the $10,000 an advance on its Emergency Injury Disaster Loan (EIDL) program. Vassallo didn't take the low-interest EIDL loan.
"SBA is required to reduce the PPP loan forgiveness amount by the amount of the EIDL advance," an SBA spokeswoman said via e-mail last week.
"Without question, this will affect thousands of small businesses," said Batten. "You have companies doing everything they could to stay afloat. They jumped on any funds to keep them in business.
"And now here comes, effectively, a bill. We were not aware of this at the time. I've talked to other folks who say it was in the fine print of the [related federal law]."
Batten and Jordanne Kissner, a former bank lawyer who works for Fafinski Mark & Johnson, expects class-action lawsuits coming from business owners over the issue.
"Those who took the $10,000, up to $1,000 per employee … a lot of owners took it as free money," Kissner said.
"There was some fine print. If you took advantage of both programs, PPP and EIDL, there was going to be a reconciliation.''
That's now pronounced clearly on SBA communications.
"Those government programs went up fast … and I thought it was free money," Vassallo said. "The business is trickling in but not coming back. Maybe after the vaccine arrives."
Vassallo has downsized to four cars and three drivers, including himself. He's planning to sell some of his fleet to raise cash to get through the winter.
Meanwhile, as the economy remains slow, the government tab is rising for all the programs and amid cries from business, nonprofits and the unemployed.
SBA traditional lending programs totaled $28 billion in the fiscal year ended in October.
The SBA was charged by Congress with ramping up huge programs in a hurry last spring.
The PPP provided $525 billion to 5.2 million businesses through 5,460 SBA-certified lenders.
There was $191 billion EIDL loan program that continues. And the $20 billion EIDL advance program, rolled out in two weeks, covered 30.5 million employees at 6 million businesses.
There is more tumult coming. Bankers and clients are scrambling to determine what they owe on PPP loans and EIDL advances.
And the IRS has ruled, in what will likely be another legal fight, that PPP-spent loan proceeds that are forgiven cannot be deducted from 2020 taxes as a business expense.
And when government opens a fire hose of money, there is fraud.
A federal watchdog suggests the SBA and its contractors potentially approved billions of dollars of loans that they shouldn't have.
The SBA's inspector general has raised questions about more than $78 billion in aid approved for businesses under the agency's EIDL program alone.
He suggested billions was fraudulently obtained by ineligible businesses and individuals. Inspector General Hannibal Ware said the SBA and its contractors were overwhelmed by the loan volume.
SBA Administrator Jovita Carranza has challenged Ware's initial findings and defended her agency's work in dispensing capital that saved millions of small businesses.
Meanwhile, the U.S. Justice Department has charged about 80 people, including several in the Twin Cities, with fraudulently obtaining PPP loans.
Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at firstname.lastname@example.org.