Businesses counting on some relief
PPP funding would carry sites through COVID-19 winter
Apollo Grill in late April received a Paycheck Protection Program loan, which helped the Bethlehem restaurant pay its roughly 40 employees for eight weeks and carried the business until it was allowed to offer outdoor dining.
But now, with coronavirus cases surging like never before and indoor dining temporarily suspended, Apollo Grill and many other restaurants are eagerly awaiting another round of federal help as they do their part to slow the spread.
“Obviously, anything will help us at this point, just to get us through until the summer of 2021 when they feel things will start to turn around,” said Rachel Griffith, owner of the 85 W. Broad St. restaurant that is now surviving on takeout
sales and gift card purchases.
Griffith said her business will apply for another PPP loan whenever the program reopens as part of a long-awaited federal stimulus package that Congress approved late Monday and sent to President Donald Trump for his signature.
The legislation is set to replenish the PPP initiative with $284.5 billion for eligible small businesses and nonprofits, which would be doled out in a new round to run through March 31. The bill also attempts to close gaps that became evident in the first PPP round in April, when many businesses with banking relationships sped through the program, while other mom-and-pops, and particularly minority-owned businesses, were left out.
“It’s not everything everybody wanted,” said Tony Iannelli, president and CEO of the Greater Lehigh Valley Chamber of Commerce. “The good news is it will help businesses and families, and they tried to touch as many bases as possible. I applaud the effort to try to service a broader reach in terms of businesses, both large, small and minority-owned.”
Rob Goza, lead economic development specialist in the U.S. Small Business Administration’s Eastern Pennsylvania District Office, said the SBA and Treasury will work to clarify and implement the procedures and timelines needed for the small-business assistance. He said he couldn’t provide any guidance on the legislation until it becomes law.
While the legislation would get a much-needed cash infusion to people and small businesses, many economists and elected officials acknowledge more federal relief could be needed early next year. President-elect Joe Biden, for instance, has vowed more relief following his inauguration Jan. 20.
The aid, however, comes too late for some businesses. As of mid-September, nearly 98,000 U.S. businesses had permanently closed since March 1, according to crowdsourcing review website Yelp’s latest economic impact report. That included 218 closures in the Allentown-Bethlehem-Easton metro area as of Aug. 31.
A poll taken Oct. 30-Nov. 10, and released last week by the U.S. Chamber of Commerce and MetLife, found that three-quarters of small-business owners said they needed further government assistance to weather a pandemic that had outlasted the economic relief programs rolled out earlier in the year.
In a separate report Tuesday on the latest stimulus, Wells Fargo Securities economists wrote: “We doubt this package will be enough to fully offset the economic damage that has already been done and is still to come, but it should go a long way toward smoothing over what could be a challenging next few months for the U.S. economy.”
U.S. Rep Susan Wild, D-7th District, lamented how long it took Congress to adopt a follow-up to the coronavirus relief legislation signed into law March 27. She added legislators will need to provide more relief early next year for the hardest-hit individuals, businesses and governments.
While she praised the latest relief bill for funding COVID19 vaccine distributions and extending rental assistance, Wild expressed particular disappointment that the Republican-led Senate blocked a separate $120 billion relief fund for restaurants and caterers debilitated by the pandemic and associated shutdowns.
However, she commended changes to the PPP program that will allow restaurant owners to get larger loans relative to their payroll than other businesses. Specifically, while the PPP generally provides a business with a potentially forgivable loan based on 2.5 times its monthly payroll costs, accommodation and food services businesses can seek loans based on 3.5 times monthly payroll, according to a summary of the legislation from the House Small Business Committee.
“This bill will help Pennsylvania restaurants with much needed capital that will allow more time for us to work with Congress to create the additional programs to save our beloved community restaurants,” said John Longstreet, president and CEO of the Pennsylvania Restaurant and Lodging Association.
Restaurants and other hardhit small businesses can now use PPP funds to cover expenses beyond payroll, such as supplier costs and investments made to comply with health and safety guidelines. For example, restaurants can use future PPP funds to cover expenses related to setting up outside dining.
Businesses that received a PPP loan this year can seek a second one, as long as they employ fewer than 300 people and can demonstrate revenue losses of at least 25% in the first, second or third quarter this year.
These “second-draw” loans would limit the maximum loan amount to $2 million for businesses with multiple locations to focus the funding on small businesses. In the earlier round of PPP, the maximum loan amount was $10 million.
“My office will be waiting to assist those small businesses and restaurants to ensure they are able to access these new funds as soon as possible,” Wild said during a Tuesday morning news conference.
U.S. Rep. Matt Cartwright, D-8th District, said businesses’ struggles with the initial PPP program offered insight into corners of the economy with which he was previously unfamiliar. His staff spent considerable time connecting “unbanked” small businesses in northeast Pennsylvania with lenders prepared to navigate SBA regulations, Cartwright said.
In particular, he praised provisions expanding eligibility for business associations and trade groups, an additional $20 billion specifically for businesses in lower-income communities, and $15 billion for live venue operators, theaters and museums.
“This bill reflects a recognition that the previous PPP program did not reach all the areas it could and should have,” he said during Tuesday’s news conference.
Many Lehigh Valley businesses were reviewing the bill Tuesday, and some weren’t sure if they planned to seek help.
Catty Corner Neighborhood Pub & Pie received a PPP loan this year, but the Catasauqua business has built a solid delivery and pickup business, co-owner Jay Cimerol said. Still, he said the pub’s numbers are down without its dine-in and bar business, especially during football season.
Whether the business applies for another loan, he said, could boil down to whether Gov. Tom Wolf extends the ban on indoor dining, set to expire Jan. 4.
“I’m just not so certain what will happen in January,” Cimerol said.
At Apollo Grill, Griffith said the earlier PPP loan was “extremely helpful” for eight weeks. But this has been a year of constant business expenses, with restaurants and many others spending money on plexiglass barriers, personal protective equipment and outdoor tents with heaters.
While Griffith understands the current ban on indoor dining and believes health is more important than money, her business’ expenses won’t stop anytime soon. She noted the restaurant’s rent will soon go up, for instance, as part of her lease agreement. Next year, just like 2020, will be about staying afloat.
“These are two years where we’re in survival mode,” Griffith said. “It’s just about surviving, and realizing what’s important and what’s not.”