Loans

SMBs Say COVID-19 Relief Loans Won’t Spur Rehiring

SMB, small business, PPP, paycheck protection loans, SBA, forgivable, rehires, laid off, coronavirus

Some small businesses that received forgivable loans under the Paycheck Protection Program (PPP) say they won’t be able to rehire every employee laid off during the coronavirus pandemic.

“There’s no way that I’m getting to 100% employment by the end of 8 weeks,” Joe Walsh, owner Clean Green Maine, told the Associated Press (AP).

The PPP will forgive the loans as long as businesses spend 75 percent of the funds on payroll within eight weeks of receiving the money. Small businesses say that economic conditions and the terms of the loan will make rehiring everyone difficult. Further, many small businesses have indicated they won’t even be able to re-open within eight weeks. 

Some employees also might not want to return to their jobs immediately because they are making more money from unemployment. The government’s $2.2 trillion relief package included another $600 per week in unemployment benefits on top of what they would normally receive. 

The National Federation for Independent Business is lobbying for less restrictive terms and wants the SBA to eliminate or reduce the 75 percent payroll condition and extend the rehiring timeframe. They also want a funding round allocated for businesses with fewer than 20 people.

The American Sustainable Business Council and several other small business associations are asking that the timeframe for rehires be changed since many businesses — restaurants, gyms, and movie theaters — were forced to shut down by the state and the reopening date is unknown.

“The process leaves (small businesses) cash-poor at the time when they have to re-open,” said Adam Rammel, the owner of a bar and restaurant in Bellefontaine, Ohio. “Me having the money and paying people to not come to work doesn’t help my business one iota.”

According to ex-Starbucks CEO Howard Schultz, a $1 trillion “bridge to a vaccine” may be the only way to save small businesses from going under. He said another version of the PPP just wouldn’t cut it for businesses to be able to keep their heads above water.

 

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