Entrepreneurs Faced with Non-Returning Employees and PPP Issues

Entrepreneurs Faced with Non-Returning Employees and PPP Issues

Reopening amidst the COVID-19 health crisis, and while low-income workers are still receiving unemployment benefits, is not turning out to be a good business move. After all. businesses that took out loans under the CARES Act Payroll Protection Program (PPP) might end up paying less for payroll and more for other overhead costs. In effect, entrepreneurs could lose their eligibility for PPP loan forgiveness.

Restaurant and fastfood owners, in particular, are in a quandary on how to carry on with the reopening of their business. Apparently, it became obvious that most customers are still uncomfortable with the idea of dining out while a health crisis is still ongoing.

The real problem though is that not all employees are willing to report for work amidst the pandemic. After all, why should they risk their health and safety?

The money being received as unemployment benefits plus the $600 weekly stipend provided as extended financial aid by the CARES Act, are more than what they earn from their pre-coronavirus jobs. Considering also that the $600 financial relief will be available up to July 31, 2020, which by that time, many are hoping the coronavirus crisis is over.

Most restaurant workers fall under the low-income earners, and many have taken into consideration the few hours and the limited capacity by which restaurants are allowed to operate. That also means there will be fewer tips to earn as extra, as opposed to keeping their unemployment benefits intact.

Not a few businesses that have reopened, have reported that employees who were sent report-to-work orders, are not responding. Several franchisees of Panera Bread Co. and 146 Applebee’s are being met with the same problem, estimating that about 30% of furloughed employees are saying that they cannot report for work due to child-care or elderly-care concerns.

Will Low Payroll Affect the Forgiveness Aspect of PPP Loans?

Many small business owners have aired concerns over their low-payroll, since loans under the PPP program can be converted into 100% financial grants only, if 75% of the money taken out as loan were used for payroll purposes.


Some say the Treasury Department has given assurance that the forgiveness aspect of the loan will not be affected if furloughed employees refuse to return to work. Still, the department has not issued any official statement regarding such matters.

Other factors that impact payroll size are the limited hours and capacity by which businesses are allowed to reopen, which also means rehiring of fewer employees. Entrepreneurs who borrowed money from the PPP program, received loan amounts that were largely based on the size of their pre-Covid-19 payrolls.

Inasmuch as state governments have imposed limitations on store hours and capacity, only a few employees have been rehired.  That being the case, the actual payroll during the period that the PPP requisite is in effect, had downsized.

At the end of the day, reopening while economic and health conditions are still unstable, does not make any sense at all.

Some are actually thinking of returning the PPP loan. Some others, especially those in retail, intend to use it in improving their business with automated and e-commerce features. That way, they can simply carry on with what has been the norm amidst the COVID-19 pandemic; that of transacting business online.

The services of call center outsourcing firms are also being considered, since now more than ever, reopening businesses have to have greater focus on customer satisfaction. 31WEST, for one, provides call center outsourcing solutions at costs much lower than hiring additional employees and under a no-contract arrangement.