Some businesses say PPP loans too costly
A federal relief program intended to keep people on the payroll could have negative consequences for Vermont restaurants. Our Calvin Cutler reports on why small business owners are so concerned about repaying the loans.
The Paycheck Protection Program provides forgivable loans to businesses that keep employees on their payroll. But some restaurants such as the Skinny Pancake say the loan could hurt more than it helps because they'll never be able to pay it back.
Benjy Adler is the founder and CEO of the Skinny Pancake. COVID-19 forced him to lay off around 200 full- and part-time employees.
He was awarded a PPP loan but he's leery of taking the loan because it could hurt his business.
"If we try to reopen the way the federal government is encouraging us to reopen using the PPP funds and we spend all that money down and then it's not granted back to us, we would have to pay $65,000 a month," Adler said.
If he takes the loan, Adler has about two years to pay it back. His loan could be forgiven if he hires his employees in a certain time period. But the problem is that Adler doesn't know when he'll be able to reopen.
"The payback is two years, and the way it's structured is we won't be able to pay it back and we'll default," Adler said.
Restaurants make up about 10% of Vermont's workforce, contributing about half a billion dollars to our GDP.
Gov. Phil Scott says he's aware of the industry's issues and that the restart Vermont task force has the issue in its crosshairs. He says Congress should extend the PPP forgiveness time period.
"When we first went into this, everyone thought eight weeks was enough and that we should be out of this by then. But as we're seeing, we are far from out of the woods on this. I think Congress taking some action would help, but we're also trying to find creative ways to help, as well," said Scott, R-Vermont.
But for Adler and hundreds of other restaurants, without immediate changes to the program, it's unclear how they'll pay back their PPP loans.
Adler says the bottom line is that he and many other restaurants will need help.
"We need their financial help, not just their well-wishing. We need their financial help to get back open," he said.
The state is still chipping away at the unemployment backlog.
The governor says if problems persist, he's considering cutting another round of $1,200 checks.
Scott reminds everyone Vermont is not alone in this struggle. He says his daughter in Rhode Island has been trying to collect unemployment there for six weeks without success.