PPP: The Feds Need to Do More
As you read the accounts of individual companies grappling with the pandemic in the June 8 issue of BusinessWest — we call them ‘COVID Stories’ — a number of themes and similarities emerge.
The first is that virtually every business in every sector of the economy was hit, and hit extremely hard by this. We talked with people in healthcare, service, tourism and hospitality, the sector known as ‘large events,’ marketing, retail, and more, and all of them said the same thing — that the floor was virtually taken out from under them back in mid-March.
Another theme is that businesses have responded with imagination and determination, finding new revenue streams, new products to develop, new ways to do things, and new opportunities wherever they arise.
Still another theme is that these new revenue streams and opportunities haven’t produced results that come anything close to what these companies were doing before the pandemic, a time that now seems like years ago, but was really only three short months ago.
Which brings us to one more common thread among the stories presented this month in a series that will continue into the summer — the fact that these companies needed help, received it, and will very likely need more help if they are going to fully rebound from this crisis.
Indeed, most all the companies we spoke with received support in the form of loans from the federal Paycheck Protection Program, or PPP, an acronym now very much part of the current business landscape.
“Most of the companies we spoke with are not even close to being out of the woods. In fact, some are counting down the days until the PPP runs out with a certain amount of dread and a painful question: ‘what happens then?’”
Some struggled to get it and waited nervously for the money to land in their accounts. Others haven’t really touched it yet and don’t know exactly what to do with it because they can’t bring their people back to work because there is, as yet, no work to do.
The program isn’t perfect, and there are some bugs to be worked out, but overall, this measure has done exactly what it was designed to do — provide a lifeline to businesses that desperately need one. PPP has enabled companies to meet that most basic of obligations — meeting payroll — at a time when so many would not have been able to do so.
But as these stories make painfully clear, most of the companies we spoke with are not even close to being out of the woods. In fact, some are counting down the days until the PPP runs out with a certain amount of dread and a painful question: ‘what happens then?’
What should happen is the government offering another round of support to companies that can demonstrate real need — and, again, that’s most of them. The recovery is not going to be V-shaped or even U-shaped. It may be several months before there is, in fact, real recovery.
And the federal government has an obligation to help businesses get to that point. When the PPP was first conceptualized, the thinking was (we presume) that, in eight weeks, the worst would be over and things would start to return to normal. It’s still early in the game, but mounting evidence suggests that is not the case.
‘Normal’ is still a long-term goal, and it’s clear that companies will need additional support to be able to keep paying people and staying upright until better days arrive.
As one business owner we talked with said, and we’re paraphrasing here — ‘the government caused this problem by ordering a shutdown … so now, they own the problem.’ He’s right.
Already, there are far more ‘for sale’ and ‘for lease’ signs on properties across the region than there were three months ago. A number of businesses, many of them in the broad realm of hospitality and tourism, have already failed. Many more will fail in the months to come if they don’t get the support they need — not only from local consumers, but from the federal government itself.
PPP isn’t perfect, but it works. And we’ll likely need at least one more round of it to enable businesses to survive this pandemic.