PPP Details Disclosed
Yesterday there was a lot of press related to disclosure of which companies in various states received money from the Payroll Protection Program and how much.
As I’ve previously shared, Boloco’s Massachusetts entity (7 restaurants) received $653,000 on April 14. Our single NH entity received a little more than $125,000.
Our Massachusetts restaurants have expended all but $100,000 of the PPP money. Since we were still losing between $35-45K per week with 4 restaurants out of the 7 operating, we had to make the hard call last week to shut 2 of them down, lay off a bunch of our team, and cut salaries (and number of days working per week) of those on corporate staff to reduce the burn.. That leaves us on the equivalent of “simmer”… hopefully cutting losses so that we can stretch to September and pray that customers actually return at that time. If they don’t, we will likely not be able to continue.
It’s obviously hard to predict anything these days, but for us, those PPP funds were absolutely crucial for survival to this point. They weren’t simply a cushion to help keep things moving along as they were prior to the crisis.
I did note, via a Boston Business Journal article (🔑), that many of the companies in Massachusetts listed as having received significant funds are companies that I am certain are not in survival mode like many of us are. One of them was one of our landlords who received no less than $5M (up to $10M) to keep their business afloat. Of course, I know, as does anyone else who has paid attention, that this organization has made massive profits in the boom years of this past decade. The few at the top, at the very least, have been enriched at levels that are beyond the imaginations of most of the population.
I’m ok with the fact that outfits like our landlord received PPP funds, because based on the rules of the game they qualified and received their fair share. Even if they weren’t in danger of disappearing, their relative performance would have felt painful to them, and the PPP funds would help offset that. Even though their situation is less dire than that of many of their tenants, they didn’t technically or legally do anything wrong.
But for those who mistakenly believe that PPP funds are saving businesses that are or were already struggling over the long haul, that’s just not going to be the case. The PPP was simply a bandaid to “reduce pain” in the short-run – the equivalent of a few Advils when going to bed after a major surgery… you’ll need more in the morning. With few exceptions, as traditionally undercapitalized Main Street businesses continue to suffer dramatically lower sales, the PPP funds will be expended and these businesses will begin to close permanently at higher rates than we’ve seen in these first few months of the pandemic.
Nobody expected free money from the government. And yet we got it. But the government isn’t going to fix the underlying problems facing many Main Street businesses, many of which existed before Corona was still just a refreshing Mexican beer. I only hope that there is consideration for “graceful” exits as businesses do begin to fold. The lives of small business owners are already seriously impacted, in some cases permanently. Some protection to them against further personal liability to creditors who are often very aggressive in these situations would probably be a good step. Ironically, the PPP monies going to landlords like I described above only further enhances that landlord’s ability to take action against the small businesses who aren’t able to meet their obligations.
A second round of PPP (or a vaccine!) is necessary IF our society wants Main Street to continue operating as we are accustomed to. If not, let’s at least help committed small business owners who won’t make it find their way to soft landings.