Paycheck Protection Program adding burden for some restaurant owners

NEW YORK - Restaurants were some of the first businesses to close, and they are expected to be some of the last businesses to fully reopen from the COVID shutdown, and the Paycheck Protection Program that was meant to help is, in some cases, having the opposite effect.

Gabriel Stulman owns nine restaurants and bars in Manhattan. "In January and February of 2020 and in all of last year all of my restaurants were profitable. They were full, they were lively," Stulman said. Then the COVID shutdown came, and now, "If all bills were to come due today, every single restaurant would be in the red between 90,000 and 160,000 per location so I’m easily sitting on a million dollars with of debt today."

Stulman isn't alone in this situation in the hospitality industry. Other bars and restaurants are suffering too, like Elsewhere bar in Bushwick, Brooklyn.

"Business was good. This was turning out to be a really good year, and all of that has been washed away, " Elsewhere owner Dhruv Chopra said.

Congress created the Paycheck Protection Program, or PPP for short, to help small businesses like these but owners say they've had a hard time getting a loan.

"We've applied for the PPP, we applied for the EID, we even applied for these other private grants but so far none of them have come through," Chopra said

Stulman had slightly better luck, "I've been told I've been approved but I haven’t gotten the money yet and I haven’t signed any documents," Stulman said.

In all, the New York City Hospitality Alliance's Carolyn Richmond says about 40 percent of her clients got the loan but now most fear they won't be able to use it.

"Many are sitting on the money but a good number of them are prepared to just turn back the money because if they can't open up a restaurant in New Yor until who knows when it’s really wasteful money if we can’t use it for the pressing priorities," Richmond said.

Restaurant owners point to several concerns with the PPP loan program.  First, in order for the loan to turn into a grant, they must hire back 100 percent of their employees now, for the next eight weeks but in New York it's unclear when they will be able to reopen.

"I'm basically being told use this money to pay your staff to stay at home. For those of our staff collecting unemployment the unemployment in many cases is more than I can offer them," Stulman said.

And even when restaurants are once again able to host diners, social distancing guidelines will mean opening at less than capacity.

"How do I maintain 100% of my people and 75% of my payroll with 25% of my seats? How does that work and for how many weeks or months are we going to be in that situation?" Stulman asked.

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That is why the New York Hospitality Alliance is asking for significant changes to the PPP program.

"Don't be so narrow that it has to be within 8 weeks all me to have 16 weeks to use it, 20 weeks to use it, if I’m going to be limited on my seating capacity do not hold me to 100% headcount think about it from a restaurants perspective we work with cooks and waiters and bartenders. I need so many cooks if I have a 30 seat restaurant. if I only have an 8 seat restaurant I don’t need as many cooks," Stulman said.

Restaurant and bar owners say not doing what is necessary to save their industry could have a big price.

"These are small businesses but this is a large impact on the economy and arguably this is what makes New York City, New York City, it's restaurants, it's nightlife."

The restaurant owners point to other concerns they are lobbying officials in New York City to change, like the recent increase in the minimum wage to 15 dollars an hour and the newly mandated sick leave laws. They say laws like this are driving up the cost of business in New York and making it less likely small businesses can survive the COVID shutdown.