Two hundred Evanston businesses have taken out loans of more than $150,000 under the Paycheck Protection Program to help them continue to pay their workers, including schools, nonprofits and restaurants, according to the US Treasury Department and the Small Business Administration.
PPP loans are designed as a direct incentive for small businesses to keep their employees on the payroll, and the amount is calculated on the basis of two and a half months of salary for the employees.
“With this COVID(-19), we have two major problems – there is a large subset of the population whose incomes are literally being cut off,” said economics professor Lawrence Christiano. “Another major problem concerns the companies that hire them. They have no income, but they still have expenses.
Roycemore School, an independent private K-12 school in Evanston, is among the businesses that received a PPP loan. He received between $350,000 and $1 million.
Vicky Pickett, the school’s director of finance and operations, said the pandemic hit at a time when the school was actively recruiting for the upcoming school year, a primary source of revenue. This recruitment process involves visiting the campus and meeting faculty and staff.
“The revenue stream that we usually have during this time of year has kind of dried up,” Pickett said. “We needed that cash flow to get us through the rest of the academic year.”
Pickett added that the Roycemore School used PPP funds to pay staff and faculty while continuing to offer academic programs to students while school buildings were closed. Roycemore School has already reopened to some children for its in-person summer camp.
The PPP loans have also allowed the school to see more clearly and plan for the future, as it plans to open the school the last week of August for all of its students, Pickett said.
The Evanston Community Foundation, a local philanthropy that supports nonprofits, also received a PPP loan of less than $200,000. Jan Fischer, chief financial officer of ECF, said that in the wake of the pandemic, many organizations in the non-profit sector have experienced significantly increased demand for their support and services, so PPP loans are important. because they allow them to maintain the staff to provide these services.
“ECF has been very active and tried to respond to the adverse effects of the COVID (-19) pandemic on the most vulnerable members of our community, and we are doing this by providing support to our local non-profit organizations” , said Fischer. “There is a lot of labor-intensive time spent building collaboration, exchanging information, participating in working groups, and so we need manpower. work.”
Fischer added that in addition to the increased demand for support and services from ECF, there is uncertainty about the organization’s revenue streams for this year, so the PPP loan has provided resources. in a timely manner to support their staff when their work was most needed.
PPP loans aren’t just important because they allow companies to keep paying their employees, but they’re also important because in the United States health care is tied to your job, Christiano said.
“When you lose your job, you’re in trouble,” Christiano said. “And so the whole point of the Paycheck Protection Plan is to provide money to these people so that they can stay glued to their jobs and not have their health care turned off.”
In June, Evanston business owner Rahul Shah was charged with trying to wrongfully claim more than $440,000 in PPP loans. The government alleges he falsified his loan application and Shah has been charged with bank fraud and making false statements to a financial institution. These crimes are each punishable by 30 years in federal prison.
Shah is the founder and CEO of Katalyst Technologies, Inc. and Boardshare LLC, both of which have offices at 500 Davis St.
“There are a lot of downsides to this massive intervention; one of them is that there will be bad actors,” Christiano said. “There are other economic downsides, like inefficiencies and things like that, but at a time of major national crisis like this, we have to be prepared to pay the price for those problems.”
Christiano added that while the government cannot monitor all loans to fully protect against all of these ‘bad actors’, implementing programs that have ineffective side effects, such as PPP, is the right thing to do. .
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