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As millions of new businesses await coronavirus relief loans now that a deal has been struck to replenish the Paycheck Protection Program, recipients are saying the money won’t be nearly enough to offset related losses.
The Paycheck Protection Program (PPP) is designed to incentivize companies with fewer than 500 employees to keep staff despite difficult economic conditions that have resulted from the coronavirus pandemic. Applicants can receive up to $10 million, which can be forgiven in certain cases. At least 75 percent of the money must be put toward payroll costs.
Bruce Rosenberg, COO and President of the Americas for HotelPlanner – a PPP loan recipient – told FOX Business that, despite receiving $1.4 million through the program, his company is rapidly losing revenue.
"Unfortunately it is not enough, this time of year we would be doing $12 million a month in gross merchant revenue, the PPP loan was a tenth of the money the company typically does in a month,” Rosenberg said.
The loan will cover payroll expenses for about a month, Rosenberg expects, and will help keep staffing levels constant. The company’s executives have either forgone their salaries – or taken a pay cut – to avoid layoffs.
The application process took Rosenberg about 1.5 hours from start to finish. He waited four days to receive the money – despite early promises loans would be available the same day.
In order to get back on the path to recovery, HotelPlanner wants to see the quarantine lifted so the economy can begin reopening.
Rosenberg noted the recovery is likely to be particularly slow for the travel industry, which has taken a severe hit as a result of the virus outbreak – and subsequent lockdown.
“We believe that business will slowly come back after the quarantine is lifted,” Rosenberg said. “By June 1 we would expect to be doing 50 percent of 2019 booking volume, which would be a great rebound from currently booking only 10 percent of last year's levels. By 2021 we hope to see 80 percent of 2019 levels.”
As previously reported by FOX Business, the restaurant industry has also voiced a variety of concerns regarding PPP. Some of the terms included to achieve loan forgiveness may render the money largely useless to restaurateurs, most of whom have seen operations cease either completely, or partially.
The Trump administration and Senate Democrats reached a deal on Tuesday on new legislation, which allocates an additional $310 billion to PPP and $50 billion to the Small Business Administration’s emergency disaster loan program. About $75 billion will go to hospitals and $25 billion will be put toward coronavirus testing.
The initial $350 billion in funding for the program ran out last week, and lenders were forced to stop accepting applications.