25 Investigates: PPP loans are a blessing and a burden for some Mass. small business owners, but changes may be on the way

25 Investigates: PPP loans are a blessing and a burden for some Mass. small business owners, but changes may be on the way

BOSTON — Just two weeks ago, Diane Cohen, owner of the Minuteman Diner in Bedford, feared she might have to permanently close her restaurant if the federal small business loan money she was waiting for did not arrive soon.

After 25 Investigates took her concerns to Bank of America, her bank of many years and the institution she used to apply for the federal Payroll Protection Program (PPP), Cohen got the much-needed funds.

But, her restaurant’s fate is still very much uncertain. The terms of the loan, she says, are unrealistic and too risky.

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“You have to use 75% of that for payroll, which I don’t know how anyone is going to be able to do that. That’s a lot. That percentage is high,” Cohen told 25 Investigates’ Ted Daniel, who checked back in with the her days after our original story aired. “Between the food costs and, you know, all those fixed bills and just not knowing when we can open."

Cohen, like several other Massachusetts small business owners, says she is grateful for the loan but she is afraid to use it.

To avoid repaying the loan, 75% of it must go towards her next eight weeks of payroll. That means Diane must bring all her employees back even though she’s only doing take out and is serving far fewer customers. Restaurants in the Commonwealth are not allowed to reopen for dine-in until at least the second week in June.

Diane is not alone. Similar concerns are being echoes across the country. And Congress is listening.

David Lewis, CEO of OperationsInc, a human resources consulting firm, has been advising business owners on PPP since the program started in April.

He says federal lawmakers and the US Treasury Department are considering overhauling the program to provide more flexibility to borrowers.

“This is going to get done, I guarantee you that,” said Lewis. “The question becomes how quickly. The problem is going to be, as it always is in Washington, the politics. If we’re going to go ahead and give a little on one side of the aisle, the other side of the aisle is looking for something else or some type of compromise.”

One proposal would allow the loans to cover a 24-week period instead of the current eight-weeks, giving employers more time to use up the money before local governments allow them to be fully operational.

Another aspect of the proposal calls for the elimination of the 75% payroll rule.

For Cohen, the owner of the Minuteman Diner, the change cannot come too soon.

Though she has the money in the bank, she would like to see the rules eased before she touches the funds.

“That's why I'm hoping the new guidelines they're going to come out with offer a little longer extension,” Cohen said.

Changes to the PPP may come in the form of an amendment to the CARES Act, the federal coronavirus stimulus bill, according to Lewis. He says the amendment could pass before the holiday weekend.

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