Cool Dogs Sports Lounge near Boulder Highway in Las Vegas is a small tavern and pool hall, frequented by locals looking for a place to drink or play slots away from crowds downtown or on the Strip. 

At 9 p.m. on March 16, after the governor ordered gaming establishments to shut down to slow the spread of the coronavirus, the tavern’s slot route operator Century Gaming removed all machines from the property. Gaming, which makes up 75 percent of the business’s revenue, came to a halt. With no option but to cease operations, tavern owner Nina Malone began looking into the Small Business Administration’s (SBA) loans for businesses affected by COVID-19.

“I went to apply for the loans,” said Malone. “And when you go on SBA.gov, and you start filling in the eligibility, there’s a check that you'd have to make to say that you do not make more than one third of your revenue from legal gambling. Well, that knocks out my business and all the other taverns in the valley and in the state.”

While the SBA originally blocked from a loan any business that derived one third of its annual revenue from legal gambling, the SBA guidelines were revised on Tuesday to allow “small casinos” to qualify for Paycheck Protection Program (PPP) loans as long as gaming revenue made up less than half of total business revenue and was less than $1 million. But the change still leaves most gaming businesses, such as Malone’s, without help.

“The way the guidance is structured, the number of Nevada casino-gaming operators that will be able to participate in the Paycheck Protection Program would appear to approach zero,” said Jeremy Aguero, a principal with Las Vegas-based Applied Analysis. “There may be a few that qualify, but the criteria are such that the vast majority will remain excluded.”

PPP loans are eligible for government forgiveness and aim to ensure small business owners keep workers on payroll. The loans can be administered by any regulated lender from large, national banks to local banks.

“So the overall arching thing is the [Paycheck Protection Program] is really designed [so employers are] able to keep their employees, give them a job, and keep them involved in the economy,” said John Miller, CEO of Lexicon Bank, which launched in 2019 and has one permanent location in Las Vegas. “So when we are allowed to come back out of our homes, these businesses can start back up at full capacity.”

To qualify for an SBA loan — whether it is a PPP loan or an Economic Injury Disaster Loan — a business must meet the administration’s criteria for a “small business,” which is fewer than 500 employees. 

Originally, the agency’s criteria excluded religious institutions and independent contractors from applying, but those restrictions have been eased.

“The guidance from the SBA is kind of constantly evolving,” said Miller.

In order for the government to forgive the loan, businesses must meet several requirements. One is that they must have the same number of employees on June 30 as they did on Feb. 15. Businesses who have already laid off employees are able to rehire those employees in order to meet the qualification.

“The goal is … if you're an employer, if you're a small business owner, hire your people back,” said Miller. “And even if you can't operate your business today, hire them back, pay them their payroll and your loan will be forgiven.”

To determine how much a business will receive, an employer reports the average of the last four months of business costs, employee costs, and payroll costs and that average is multiplied by 2.5. In order for loans to be fully forgiven, at least 75 percent of that amount must then be spent to cover payroll costs.

“The pressure that’s getting put on the unemployment market really will, ultimately, set back the economy, if we have to go through this huge hiring process all over,” said Miller. “This is allowing employees to stay with their current employer.”

For many businesses, the loans will make the difference between remaining open or being forced to shut down entirely. For Andrew Donner, the owner of Timbers hospitality group in Las Vegas, the revision was still not enough to allow him to qualify.

“We were cautiously optimistic that we would be treated fairly,” said Donner, who operates seven taverns in Clark County and employs approximately 250 workers among them.

“They actually made it worse,” he continued. “Because they didn’t have the million dollar limitation in the first round.”

Donner says that even while a significant portion of his revenue comes from gaming, around 95 percent of operating expenses including staffing at the taverns go towards the food service side of the business. He blames the SBA restrictions on an “outdated code” that “discriminated” against those in the gaming business.

“No one’s fighting, no one’s saying, ‘hey don’t give it.’ There’s not an organization, there’s not a group, there’s no people,” he said. “This is an arbitrary number of SBA code, and isn’t the whole premise here to help people get back to work and off of unemployment and stimulate the economy? I don’t even understand the logic here.”

The change in the gaming restriction has allowed a few employers to qualify who previously did not. 

The Lakes Lounge restaurant and gaming bar in Las Vegas has been open since 1987 and has 28 full-time employees. Because the restaurant doesn’t have a to-go or delivery option, it’s been forced to fully close during the shutdown.

Jamie Holcombe, the restaurant’s owner, says that after Tuesday’s revision, the restaurant now qualifies for PPP loans. But he’s been frustrated by the restrictions on the loans. Initially told he could apply, he didn’t find out he didn’t qualify under the original rules until he was filling out the application in the portal.

“We had the CPA read through it, saying ‘we’re good,’” he said. “And then you went to the SBA portal where you sign up, and then if you’re any one of these things then you don’t qualify.”

Even though he qualifies under the new guidelines, Holcombe still sees a problem with limiting legal gaming establishments to any degree.

“Why are my employees different than the Black Bear Diner that’s around the corner? That’s what I don’t understand,” he said. “If gaming is legal, why is there a stipulation that you can’t get it?”