The Small Business Administration’s (SBA) Paycheck Protection Program (PPP) has been a lifeline for businesses across the country, including New Jersey’s 500+ neighborhood new car and truck dealerships caught in the epicenter of the global COVID-19 pandemic.
Many businesses have applied for and received SBA funding, but now have come to see there is a serious flaw in how the loan forgiveness formula works. It rewards businesses that can immediately hire back employees who were laid off or furloughed, but penalizes employers that cannot immediately rebuild their workforce to pre-crisis levels.
This “back to work” emphasis of the PPP conflicts with the “stay-at-home” orders and forced closures of retail businesses that remain in place in the hardest hit portions of the country, like New Jersey. Dealers have an obligation to ensure a safe place for their employees and customers, but many are reluctant to venture out to shop or return to work until the worst of the crisis passes.
The PPP is providing small and midsized businesses with access to capital in the form of low-interest, long-term loans, much of which can be forgiven, IF a borrower can ramp up operations quickly. The PPP was designed to help businesses stay afloat and fund payrolls. But employers in high operating expense businesses (like auto retail) and high cost-of-doing-business areas of the country (like New Jersey) are being penalized for putting the health and safety of their employees and customers first. With strict government “stay-at-home” orders in place, employers are unable to coax many of their employees back to work, where they fear contact with infected customers or coworkers and where sales are down 70 – 80% and service is declined 50 -60%.
NJCAR is calling for the SBA loan forgiveness rules to be amended for businesses in the most hard-hit areas of the country. The immediate back-to-work requirement in the SBA loan program needs to be relaxed and better aligned with State and local stay-at-home orders. As it stands now, the federal SBA loan stimulus program is on a collision course with State and local public health policy.
We are asking dealers to support this important grassroots effort by sending an e-mail to the members of the New Jersey Congressional delegation. Join NJ CAR in urging your representatives to help lobby the SBA to allow dealers to have more flexibility in loan forgiveness and to better coordinate loan forgiveness timeframes to coincide with the reopening of the economy in those areas that have been hardest hit by the COVID 19 crisis.
It takes just a few seconds. Simply fill out the brief form on this page and hit “Submit” and your communication will be sent to every member of the New Jersey congressional delegation.