A panel of business and organization leaders Wednesday counseled small-business owners and entrepreneurs from around the Lehigh Valley and surrounding areas about how to navigate these uncharted waters created by the COVID-19 pandemic.

Hosted by Spotlight PA, a nonpartisan investigative organization of journalists dedicated to reporting on Pennsylvania government and urgent statewide issues, the hourlong teleconference mostly dealt with the Payroll Protection Program which is now in its second phase nationally.

Kenneth Shivers, president and CEO of the Pennsylvania Association of Community Banks, suggested that the owners of small businesses, who have not had relationships with banks, quickly establish one. If not, he said, it is likely that these businesses will be left in the dust for the second program.

Shivers acknowledged that minority and rural businesses have been passed over in the first round of the PPP primarily because it takes several days to forge a relationship by filling out the required paperwork. In addition, he added, single entrepreneurs had to wait a week to apply, according to federal regulations. “Businesses of color and culture are struggling,” he said.

After his organization lobbied members of Congress to let them know that community banks are significant players in the process of granting loans to small businesses, the second round of PPP loans have eliminated these restrictions, Shivers said.

The PPP authorized in round 1 up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. Round 2 involves $310 billion.

Some businesses which received these loans are tempted to use them for other purposes rather than for the intended reason - to retain employees during the pandemic.

Shivers cautioned that even though the interest rate is just 1%, if the loan is not used for this purpose, it is defeating the goal of the program.

“It shouldn’t be considered free money,” he said, advising that there are consequences if borrowers do not follow the federally mandated rules.

Because many large corporations took advantage of the phase 1 loans, the Treasury Department announced this week that any loan in excess of $2 million is subject to audit. Shivers predicted that other loans may be carefully scrutinized, too. He strongly suggested that the loans be used to “follow the spirit of the program.”

Juliana Bolivar, business development coordinator for Community Action Development Center in Bethlehem, said that few small-business owners were able to get loans during the first round of the PPP program and have been frustrated with the uneven rollout of the second round, which began this week.

The survival of some small businesses is in doubt because of the need to revise their models of operation drastically in the post-pandemic world. For example, can restaurants survive with significantly fewer seats?

This is where creativity and innovation come in, said Bolivar, who suggested that business-owners and entrepreneurs need to put together a game plan and guidelines now while time is still on their side.

Brett Smith, director of the Small Business Development Center at Lehigh University, agreed. Restaurant owners will have to calculate how many seats can remain because of social distancing to ensure profitability, along with robust takeout and curbside services.

In speaking to a restaurant industry executive, Shivers said he was told that more than 30% of small restaurants will fail because of their inability to come up with a workable model in the post-pandemic world.

The program was moderated by Chris Baxter, Spotlight PA’s editor-in-chief.