Businesses like new PPP rules

Law extends loan terms, allows more money to go for rent

PRESIDENT TRUMP on Friday signed into law a measure that business owners in Massachusetts say will make it a lot easier for them to take advantage of federal aid to keep their companies afloat.

The new law changes the terms of the original Paycheck Protection Program, allowing more money to be spent on rent, utilities, and other business expenses and providing more flexibility on rehiring workers and paying back the original loan.

Under the original law, companies could borrow up to 250 percent of the firm’s monthly payroll with a maximum loan of $10 million. The law required 75 percent to go for payroll and 25 percent for rent, utilities, and other business expenses in order to be forgiven. Any more than 25 percent toward overhead costs meant it would have to be paid back.

The loans were gobbled up quickly during the first round of applications, but many businesses shuttered by the coronavirus discovered they didn’t need much money for payroll because their companies were closed. Their rent and other overhead expenses didn’t go away and continued to pile up. By reducing the payroll requirement to 60 percent, companies are now able to cover more of the rent they owe.

Another major change with the new law is that it extends the June 30 deadline to rehire workers to December 31, 2020, which will help businesses that don’t want to rehire employees until they can actually reopen in accordance with the Baker administration’s reopening plan.

“In states like Massachusetts, a good number of small businesses aren’t open, like gyms and entertainment venues. Those businesses are concerned about PPP money lasting till they can open,” said Christopher Carlozzi, state director for the National Federation of Independent Business.

The law extends from eight to 24 weeks the amount of time the business owner has to spend the monies.

Payback time for the loan has been extended from two to five years if the amount provided doesn’t convert into a grant.

The law also eases rehiring requirements so that a business can still get complete loan forgiveness on payroll expenses if its unable to rehire an individual who was an employee on or before Feb. 15, 2020, or if it is able to demonstrate an inability to return to the same level of business activity as it had prior to that date.

At Johnny’s Luncheonette in Newton Center, co-owner Karen Masterson secured $227,000 in PPP loans but is waiting until she’s able to open to start rehiring workers.

“We can’t use 75 percent on staff hiring because we can’t legally open for sit-down business,” Masterson said, admitting that high delivery charges have prevented her from making money on deliveries.

Masterson chastised Congress for rushing through legislation that didn’t make a lot of sense for many small business owners. “With the new restructuring and timeline, I think we will be able to meet guidelines and get the loan forgiveness. I’m really much more hopeful now than I was two days ago,” said Masterson.

Johnny’s is expected to open next week with four picnic tables outside, she said. She’s hoping to use some PPP funding for some of the safety equipment the government is requiring, including masks, which she estimates will cost her about $600 per month.

In Holyoke, Westside Finishing Company Inc., which does powder coating and silk screening on metal, has been able to remain open as an essential business in the manufacturing sector. Owner Jeanne Bell said she received $489,000 in PPP loans and used 80 percent of it for payroll.

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Sarah Betancourt

Reporter, CommonWealth

About Sarah Betancourt

Sarah Betancourt is a bilingual journalist reporting across New England. Prior to joining Commonwealth, Sarah was a reporter for The Associated Press in Boston, and a correspondent with The Boston Globe and The Guardian. She has written about immigration, social justice, and health policy for outlets like NBC, The Boston Institute for Nonprofit Journalism, and the New York Law Journal. Sarah has reported stories such as a national look at teacher shortages, how databases are used by police departments to procure information on immigrants, and uncovered the spread of an infectious disease in children at a family detention center. She has covered the State House, local and national politics, crime and general assignment.

Sarah received a 2018 Investigative Reporters and Editors Award for her role in the ProPublica/NPR story, “They Got Hurt at Work and Then They Got Deported,” which explored how Florida employers and insurance companies were getting out of paying workers compensation benefits by using a state law to ensure injured undocumented workers were arrested or deported. Sarah attended Emerson College for a Bachelor’s Degree in Political Communication, and Columbia University for a fellowship and Master’s degree with the Stabile Center for Investigative Journalism.

About Sarah Betancourt

Sarah Betancourt is a bilingual journalist reporting across New England. Prior to joining Commonwealth, Sarah was a reporter for The Associated Press in Boston, and a correspondent with The Boston Globe and The Guardian. She has written about immigration, social justice, and health policy for outlets like NBC, The Boston Institute for Nonprofit Journalism, and the New York Law Journal. Sarah has reported stories such as a national look at teacher shortages, how databases are used by police departments to procure information on immigrants, and uncovered the spread of an infectious disease in children at a family detention center. She has covered the State House, local and national politics, crime and general assignment.

Sarah received a 2018 Investigative Reporters and Editors Award for her role in the ProPublica/NPR story, “They Got Hurt at Work and Then They Got Deported,” which explored how Florida employers and insurance companies were getting out of paying workers compensation benefits by using a state law to ensure injured undocumented workers were arrested or deported. Sarah attended Emerson College for a Bachelor’s Degree in Political Communication, and Columbia University for a fellowship and Master’s degree with the Stabile Center for Investigative Journalism.

She’s hopeful that the new rules will mean that she can use the loan until the end of the summer to pay employees until business returns to normal. “It gives you more time to use the funds. I think a lot of business owners were hoping they would extend that eight-week period,” she said.

According to the Small Business Administration, which administers the program, more than 4.5 million loans have been granted, but funding remains so businesses can continue to apply for the program through their banks.