Extensive Paycheck Protection Program May Not Be Enough to Help Small Businesses: NPR
Many small businesses are hanging by a thread right now. Congress has approved another round of loans to help keep their doors open, but that won’t be enough to help those hardest hit.
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This winter, millions of small businesses are barely surviving. Congress approved another round of loans to help these businesses. But as NPR’s Jim Zarroli reports, it won’t be enough for those closest to the edge.
JIM ZARROLI, BYLINE: This year, Arindam Jha opened an ice cream store, Glazier Rolls in Union Square in San Francisco. His timing couldn’t have been worse.
ARINDAM JHA: Our grand opening was on February 21 and our store was closed due to COVID on March 15.
ZARROLI: Jha was eventually allowed to reopen, but tourists stopped coming to town, and the downtown office workers he hoped would frequent his store mostly work remotely. So he’s only making about 15% of the revenue he expected.
JHA: We’re not breaking even. Every day that we are open, we bleed money. If we just closed the store I think we would save some money.
ZARROLI: Jha is one of the millions of small business owners whose livelihoods are at stake. The pandemic has left many businesses in critical condition, says Matthew Revere of consulting firm Next Street.
MATTHEW REVERE: We would expect 30% of businesses overall to close with a higher number of minority women-owned businesses, possibly exceeding 50%. It’s – it’s very serious numbers.
ZARROLI: Last week, after months of tough negotiations, Congress threw in a lifeline. It expanded the Paycheck Protection Program, which loaned money to more than 5 million businesses earlier this year. For some business owners, the program is just on time. Anita Sanders owns a Buffalo business that provides security guards for shopping malls and office buildings. Business dried up overnight when many buildings had to close.
ANITA SANDERS: We had security in theaters, malls. We have covered many government entities, like libraries, courthouses. Many of them closed immediately.
ZARROLI: Sanders doesn’t think business will pick up anytime soon, so she wants to pivot by offering training courses for rangers who need to renew their licenses. But it needs the money, and that’s where the Paycheck Protection Program comes in.
SANDERS: It’s really, really important. I mean, it might make a difference from 2021.
ZARROLI: Yet not all businesses are eligible for the program. Borrowers must show that their income is down 25% from last year. So, new businesses like Arindam Jha’s ice cream shop are probably not eligible. Jha is considering applying anyway because you never know.
JHA: Even if we would apply for a PPP, or whatever the government is this time around, and we can get approved, that would be a stopgap solution, and it might not save my business in the long run.
ZARROLI: If the clients don’t come, the loans won’t make any difference. Before the pandemic, customers lined the block around the block at San Francisco’s restaurant Che Fico to try fine cocktails, original pasta, and Roman-Jewish appetizers. Now it’s empty. Owner Dave Nayfeld strives to keep his business running. He sells cookie tins and holiday meal kits. But with winter here, hanging on is getting harder and harder.
DAVID NAYFELD: January is going to be a really, really, I think, sad month for the restaurant industry. You will see tens of thousands of restaurants closed.
ZARROLI: Nayfeld says all the lockdowns and reopenings and more lockdowns have left restaurants in debt. Some invested heavily in outdoor seating, only to be told they couldn’t use it. They won’t want to apply for a loan, even if it could be canceled.
NAYFELD: Most restaurants are already in debt, so the idea of converting something into more debt is basically like a cyanide pill that’s just going to kill you later.
ZARROLI: Instead, says Nayfeld, many restaurants will cut their losses. They will close completely and other jobs will be lost. Help is finally coming for some small businesses. For many others, this will not be enough to save them. Jim Zarroli, NPR News.
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