On March 27, A $2.2 trillion economic stimulus package known as the Coronavirus Aid, Relief and Economic Security (CARES) Act was passed by Congress and signed by President Donald Trump. The package is best known for its $1,200 checks authorized for most adult Americans, as well as the $600-per-week increase it provides to unemployment insurance.
A lesser known part of the stimulus is the Paycheck Protection Program (PPP). The PPP, constituting approximately $349 billion, offers loans to small businesses with under 500 employees. The PPP is a big deal, and has drawn comparisons with Denmark’s approach of having their government pay companies’ payrolls during the crisis.
Yum Yum Better Ice Cream is perhaps Greensboro’s most iconic small business, and certainly a city staple since its inception in 1906. The restaurant even remained open through two world wars, thanks to some savvy business schemes such as selling hot dogs when sugar and dairy were added to the list of rationed provisions.
“Our sales are off 50-55 percent,” said Clint Aydelette, owner of Yum Yum Better Ice Cream. “And this time of year, we need to be making good profit to be able to save up for next winter when we know we’re gonna be slow. So we’ve been taking a hit as far as what we’re going to be able to do next winter.”
The PPP loans are meant to cover eight weeks of a business’ payroll and operating expenses, and will be forgiven so long as the business spends at least 75 percent of the loan on payroll costs. The forgiveness amount will be reduced if payroll costs are lessened through layoffs or wage cuts.
The program is not without its flaws, however.
“From what I’ve learned from [the PPP], you can get the money for up to two months but then after that you have to repay it with interest,” said Aydelette. “So I don’t see us using that. I know they wanna try to keep people employed as long as they can, but…. We would probably just stay open as long as we can and then put people on unemployment.”
A big criticism of the program is its eight week timeframe. It’s uncertain when the COVID-19 crisis will end and some state governments, such as Virginia, have even asked businesses to shut down for at least ten weeks. This essentially places even more debt on those businesses that require financial aid for longer than eight weeks.
Businesses that employ primarily college-aged adults potentially have an even bigger responsibility to maintain their payroll. Although most adults will receive $1,200 checks from the CARES Act, dependents above the age of 16 will not receive anything. This includes some high school and college students between ages 17 and 24, even if they normally work and file taxes themselves, as well as adults with disabilities and elder adults who are claimed.
The online response to this omission of financial aid has been large—and exceedingly negative.
“This stimulus package hurts college students more than it helps,” said Landon Mitchell, a student at UNCG. “We are already weighed down by student loan debt, and with most businesses closed or reducing hours, there’s no way to pay rent or buy food—let alone any kind of medical or home emergency that could arise. While big corporations and industries get a bailout, some of the most vulnerable people get nothing.”
Around half of Yum Yum’s employees fall in that category, as do the employees of many businesses close to UNCG’s campus.