Since locking the doors and freezing our auto-debits, we have been in survival mode. We started a GoFundMe campaign for our staff and raised enough money to pay health-insurance premiums for April. Our loyal supporters continue to buy gift cards. We launched an online wine-class series to stay connected with our guests and create a revenue stream, albeit a minor one ($10 a class). Those funds will help us pay our vendors and turn the lights on when we can safely reopen.
But these emergency measures are unsustainable without assistance from the federal and local government. And so far, that assistance has been impractical, insufficient, or both.
Last month, de Blasio announced a $75,000 interest-free loan available to local businesses that could prove a 25 percent decrease in sales over a two-month period in comparison with sales in the same two months in 2019. Only recently did we meet the threshold, since our drop-off was so sudden, starting in the second week of March, unlike restaurants in Chinatown, for instance, that closed in February. As of last week, applications were closed. Our attorneys think they can push ours through since they created an account in time, but the money is presumed to have dried up.
Read: How to get food during a pandemic
The Economic Injury Disaster Loan program, run through the Small Business Administration, requires a personal guarantor for the amount of money we would need. We are not in a position to guarantee hundreds of thousands of dollars. Especially without any idea of when we will be able to reopen or what business will look like. Will the hours of operation be limited? Occupancy reduced? Our previous sales projections are now moot.
And business-interruption insurance? Most restaurants don’t even pay for this. We do, but our broker informed us that our policy excludes closures due to a virus. Such is the case for most policyholders in New York State. A handful of well-known restaurateurs are uniting to fight their insurance carriers. So will we, but we aren’t holding our breath.
In late March, when Congress passed the $2 trillion relief package, we thought one component in particular, the Paycheck Protection Program (PPP), would finally provide a real lifeline. Here’s why it doesn’t.
The premise of PPP is that the federal government will loan you up to two and a half times your monthly payroll through private lenders, and the loan will be forgiven as long as 75 percent of those funds are allocated to retaining and paying employees. The other 25 percent can be used on rent and utilities.
After the bill passed, the Small Business Administration, which is in charge of the PPP, added a new clause that requires 75 percent of the funds to be used for payroll whether you are seeking forgiveness or not. It also requires you to either keep or rehire all your staff. The kicker: Those payroll funds must be used within eight weeks from the time the loan is distributed, which could happen as early as this week.