Maine Restaurant Owner: Paycheck Protection Loans Well Intended But Falling Short
The Paycheck Protection Program loans overseen by the U.S. Small Business Administration are some of the first federal financial efforts aimed at easing the economic burden placed on people by the current pandemic. But some small business owners say the rollout and the loan itself don't quite benefit people as intended. Andrew Volk owns the restaurant, Portland Hunt + Alpine Club. Volk discussed his experience with Maine Public's Morning Edition host Irwin Gratz.GRATZ: My understanding is you've secured a loan, but aren't touching the money. Why?
VOLK: We applied very quickly, very early on in this program, on Friday when the applications were available. And it wasn't clear to me then, and I was hoping that it'd be clear to me by the time we closed all of the specific terms of forgiveness, and yet the SBA hasn't released all of those terms of forgiveness. So instead of being a grant, or even a forgivable loan, it's simply a loan. And we're not in a position, and don't want to be taking on debt that we don't need to be taking on when we aren't open, and aren't going to be open for at least several more weeks, if not much longer.
Now, you've said that the loan application process went well. So at what point did you realize that the loan might not work for your business?
We worked with a local bank, Bangor Savings, and they were wonderful. But they didn't seem to have direction - through no fault of their own - from the SBA. Then the terms and sort of the details of the program continue to change even as people are applying for and closing these loans. They seem to be writing the rules still, as people are taking on money, which is, frankly, a dangerous and scary way to go about doing business.
More than half of the privately owned businesses in Maine are small businesses. Many, like yours, depend on seasonal work. So what are your broader concerns about how this might affect the state's economy?
The statute demands that we are back to full employment, and have the same number of full-time workers on our payroll as we did before all this started, in eight weeks. And while I think Congress was trying to do their best, I don't think that eight weeks is a reasonable timeframe. That puts us back to the middle of June. And I don't think that any of us in the restaurant and hospitality business are going to be back to 100% capacity in June. So that means we don't know who we're going to hire and perhaps have to lay people off after taking them on for eight weeks, because we are not able to pay them after this money runs out.
So how would you like to see the federal government - the SBA, perhaps - restructure this program so that it actually would meet your needs?
The initial goal of this program was an admirable one - they were looking to replace paychecks and essentially bring people back to work even if they didn't have work to go to. That's great. We absolutely have to support the workers in our business. But the timing needs to be extended. I think there needs to be more money. And I think there needs to be more money available for things beyond paychecks, including, you know, reopening costs and perhaps grants. I look at the Paycheck Protection Program because it put our economy in a medically induced coma, and now we need to wake it up and we need to stimulate it. And we need to get it going again.
Talk a little bit more about what kind of costs a business like yours is going to incur when it's ready to reopen.
In the restaurant world, about 30% of our budget is spent on payroll. But the paycheck Protection Program mandates that 75% of the loan is spent on payroll. So there are so many costs, beyond payroll and beyond rent and utilities, that, you know, businesses like mine in restaurants and in the hospitality world, we have so much perishable product, product that we're buying from our local farmers, from our local fishermen, from the breweries and the distributors in the wineries around the state. And we need the ability to repurchase that product - product that we have lost and isn't covered by insurance. You know, we're small businesses, and giving money to small businesses is going to have a multipling effect across our state's economy.
And of course, even at some point when regulations are lifted, your business is not likely to snap back to exactly where it was, say, at the end of February.
You know, we are projecting that when we open, whether it's May 5, or whether it's June 5, or even into July or August, there will still be social distancing measures in place. We will probably be operating it between 40 and 60% of our normal capacity for June or July, which, you know, as we all know, with Mainers is one of our busier times. And that's the time where, you know, we're making hay so that we can put stuff away for the winter. And if we're not able to do that, then it's, you know, it's gonna be a scary long-term picture for the next 12 to 18 months, honestly.
That’s Portland Hunt + Alpine Club owner Andrew Volk discussing early efforts by the Federal government to help small businesses during the spread of COVID-19.