She got a forgivable loan. Her employees hate her for it.
One small business owner got a Paycheck Protection Program loan. Her employees are furious.
She got a forgivable loan. Her employees hate her for it.
Jamie Black-Lewis felt like she won the lottery after getting two forgivable loans through the Paycheck Protection Program.
Black-Lewis saw the $177,000 and $43,800 loans, one for each of the spas she owns in Washington state, as a lifeline she could use for payroll and other business expenses.
She’d halted pay for the 35 employees — including herself — at Oasis Medspa & Salon, in Woodinville, and Amai Day Spa, in Bothell, in mid-March, when nonessential businesses in Washington closed due to the coronavirus pandemic.
When Black-Lewis convened a virtual employee meeting to explain her good fortune, she expected jubilation and relief that paychecks would resume in full even though the staff — primarily hourly employees — couldn’t work.
She got a different reaction.
“It was a firestorm of hatred about the situation,” Black-Lewis said.
The animosity is an unintended consequence of the $2.2 trillion coronavirus relief package enacted last month.
The law, the CARES Act, offered $349 billion in loans for small businesses struggling as a result of Covid-19. Banks, backstopped by the federal government, can fully forgive the loans under certain conditions.
Among them, the bulk of funds must go toward payroll, salaries must remain intact and employee head count must not decrease. Businesses have until June 30 to rehire laid-off or furloughed workers.
Black-Lewis was trying to meet these rules, especially after her bank reiterated she must continue to pay workers for loan forgiveness.
The anger came from employees who’d determined they’d make more money by collecting unemployment benefits than their normal paychecks.
“It’s a windfall they see coming,” Black-Lewis said of unemployment. “In their mind, I took it away.”
“I couldn’t believe it,” she added. “On what planet am I competing with unemployment?”
Black-Lewis is surely not the only entrepreneur to struggle with such dynamics.
Roughly 22 million Americans filed for unemployment in the four weeks ended April 11. Lawmakers are poised to infuse an additional $310 billion into the Paycheck Protection Program, which exhausted its initial funding, this week.
Unemployment benefits
The coronavirus relief law increased weekly jobless benefits for recipients, boosted the duration of benefits and extended pay to previously ineligible groups of workers like the self-employed.
Specifically, the new law adds a flat $600 a week to the typical weekly benefits paid by one’s state.
Those traditional benefits, which vary widely between states, replaced about 40% of one’s prior wages, according to a national average cited by the House Ways and Means Committee.
