Many small businesses say government loan won’t enable them to rehire
Some small businesses that obtained a highly-coveted government loan say they won’t be able to use it to bring all their laid-off workers back, even though that is what the program was designed to do.
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To get the loans forgiven, companies need to spend 75% on payroll within eight weeks of receiving the money. The other 25% can be spent on rent, utilities, and mortgage payments. Otherwise, the loan has generous terms: Only a 1% interest rate and six months before any principal is due.
Many of the small companies that were able to obtain a loan are having second thoughts about rehiring all their workers and a few plan to return the money. Others will use what they can on rent and utilities, and will use some to rehire a portion of their laid-off staff. But most are unsure they will be able to reopen eight weeks from now. They see little point in rehiring all their workers, paying them to do little or nothing, and then potentially laying them off again if business remains weak two months from now.
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“You’re turning the business into a pass through for the federal government,” said Joe Walsh, who owns Clean Green Maine, a cleaning service in Portland, Maine with 35 employees. “You’re doing very little to actually help the business.”
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Walsh, who received a $280,000 loan from the SBA, said that he is reluctant to push his employees to return to work because, under unemployment benefit rules, they could lose their weekly checks if they turn down potential jobs.
“That’s just putting me as the employer in a really difficult position,” Walsh said. He pays at least $17 an hour, with benefits, but his former employees are getting the equivalent of roughly $25 an hour from unemployment.
Right now, Walsh’s business is closed due to lack of demand for cleaning services. He hopes to reopen soon and bring back some workers, retrain them on new sanitizing processes, and earn a bit of revenue. Still, he doubts his business will be anywhere close to what it was anytime soon, which means his workforce won’t be either.
“There’s no way that I’m getting to 100% employment by the end of 8 weeks,” he said.
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Well that certainly highlights the problem...the gov't pays you more taxpayer dollars to sit on your butt than you earn from work. Ugh.