Peter Menzies got two coronavirus relief loans last month: one for a bookstore and the other for a restaurant. Now he’s returning the latter, the biggest by far at $125,000.
It’s not that he doesn’t need federal aid for his Reading Room restaurant in the hamlet of Katonah, New York, about 40 miles (64 kilometers) north of Manhattan. Capacity limits mean he will lose too much money to justify reopening and rehiring 20 workers now. And the rules to turn the loan into a grant are so restrictive that when the period for using the funding ends on June 11, the place would probably have to close again anyway, he said.
“We were essentially just going to rehire people, ask them to go off of unemployment, take lower wages, and then not really work or only work in a very limited capacity,” Menzies said.
Menzies’s conundrum helps explain why, after a mad dash for funding last month, the $669 billion centerpiece program to keep the 30 million U.S. small businesses afloat during the crippling pandemic has abruptly slowed. Created at the end of March as a stopgap to keep workers employed for eight weeks during a self-induced coma of the economy, the program known as PPP is about to outlive its own purpose. Efforts are underway in Congress to loosen the rules and accommodate the needs of businesses today.
It’s a critical time for the rescue effort, as large swaths of the country are reopening and many stores won’t get more leniency from their landlords. While almost 4.5 million firms have been approved for loans, the pace of new approvals has sharply dropped this month.
And Friday starts the period when firms that got funding when the program launched on April 3 can start applying to have their loans forgiven in a complicated process that lenders and small-business advocates want to see simplified.
“We’re stalled because it needs a refresh and it needs to reflect what’s needed for small businesses on the ground in order to survive to the other side of this crisis,” said Karen Kerrigan, president and chief executive officer of the Small Business & Entrepreneurship Council.
This article was originally published on finance.yahoo.com/finance/.