WASHINGTON–Many of the companies that received Paycheck Protection Program loans to help maintain their payrolls are now running out of those funds and letting workers go, according to several new reports.
“They got PPP loans and they’re now running out, and they’re having to make major cuts,” Diane Swonk, chief economist at Grant Thornton, who advises several small businesses, told the Washington Post. “It was the wrong bet. This wasn’t just a transitory event.”
While official data is not available on the numbers of layoffs tied to companies whose PPP funding is expiring, the National Federation of Independent Business found in a survey it conducted 22% of PPP recipients surveyed have laid off or expect to lay off employees after using up their PPP loan, up from 14% in June. The Washington Post also cited a report from Goldman Sachs that found that only about one in six businesses that received loans said they were confident they could pay their employees without further assistance.
The Post noted that in recent weeks layoffs have been reported at New Era Cap. Co., which received $5 million to $10 million; Peoria Charter Coach, a bus travel company that laid of 132 workers (95% its workers) after receiving between $1 million and $2 million; at least a dozen museums, including the National September 11 Memorial and Museum and the Philadelphia Museum of Art, and Rosen Hotels, which received between $2 million and $5 million.
Layoffs to Continue
Economists told the Post layoffs due to the PPP’s expiration will probably continue to grow as the pandemic’s toll continues. As CUToday.info reported earlier, the program’s terms were originally slated to last eight weeks and was expanded to 24 weeks, although it was left up to companies whether to use the expansion.
“There’s not sufficient demand to support the employment of people at companies that received PPP,” Joseph Brusuelas, chief economist at RSM told the Post. “Investors and legislators should brace themselves for another round of joblessness.”
As CUToday.info also reported, the PPP continues to have more than $100 billion in funds remaining.