April 28 2020

COVID-19 Response Hurting Businesses Despite Federal Stimulus

By: Rich Hosford

Despite a record-breaking relief package from the federal government the state of businesses in the country, including here in Burlington, is not healthy. 


“It’s been tough, it’s been real tough in the last month,” Burlington Area Chamber of Commerce President Rick Parker said in an interview last Thursday. He spoke to BNEWS before another round of stimulus packages were approved by the House of Representatives that day. 


He said issues with getting assistance from the stimulus package has been the number one topic of conversation among small businesses in the past few weeks. The Economic Disaster Injury Loan Program, which initially provided $10,000 grants, had its application changed shortly after being set-up to make the process more streamlined but those businesses who applied before the change had to go through the application process again. Also, the funds dried up quickly and the grants were changed from the initial amount to $1,000 per employee up to $10,000. 


“People did start to see that money trickle in,” Parker explained. 


However, the big issue was the Paycheck Protection Program that initially had $349 billion in stimulus funds that were meant to go to companies with 500 employees or less. Those funds, as reported widely, also quickly dried up and in many cases larger companies ended up with large sums of the funds. 


“The mom and pop shops to a large extent got left behind,” Parker said, adding that to a large extent the entire state of Massachusetts received a small portion of the package, garnering only $10 billion of the $349 billion total.  


He said the problem appears to be that the funds went first to banks already associated with the Small Business Administration and many of those banks had existing relationships with larger companies. He said that in this next round of fund disbursement, which began Monday, he hopes will be more equitable and benefit the small businesses the stimulus package was created to help. 


“I'm hoping this second round will help because there are some businesses that are hanging by a thread,” Parker said. “If they don’t get this they could go into an unemployment system during the wrong time.” 


Burlington Economic Development Director Melisa Tintocalis, interviewed on Friday, said she has also heard of issues with the PPP. 


One issue she said she heard from some restaurants concerns the extra $600 people are receiving with unemployment benefits.  


“I’ve heard from a couple of restaurants that the PPP is set up to pay employees but an interesting dynamic they’ve seen is that with the unemployment and the additional 600 dollars some people have opted to be on unemployment because they are making more,” she said. 


Tintocalis said that while many restaurants are struggling a good number of them have some income coming in through take-out and delivery services. This now extends to beer and wine for people who would rather avoid going into a liquor store. 


The sector she said hit the hardest is retail. 


“The retail sector is the most neglected and having the hardest time,” she said. “They’re having a particularly tough time because even if they try to get a little creative because they’re non-essential they’ve been really limited.”


She said both Nordstrom and Kohl’s tried to do a pick-up system at their stores but were issued a cease-and-desist order from the state. She added they might attempt to appeal. 


Tintocalis said some of the major property owners in town have given tenants relief in the form of a forbearance on rent. 


“They are not waiving the rent,” she said. “It’s a forbearance - if they have it for two or three months the rent from that time can be distributed over course of the lease.”


Finally, Tintocalis said that she, like everyone, hopes things can get back to normal soon. 


“I don’t think anyone anticipated it and now the duration is really crippling for a lot of people,” she said. “My heart goes out to everyone because this is just so challenging.”


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