The outlook for Boston-based, Mexican-inspired restaurant chain Boloco is, in one word, bleak.
Boloco co-founder John Pepper’s journey began as part of a business school project, eventually growing to 22 locations that he sold to a private equity firm before buying it back years later to save what remained of the ailing chain. Set up as a B Corporation that balances profits with social value, Pepper put most of the profits into paying employees and promoting from within.
And while 2019 was a tough year for the eight surviving locations at the time, 2020 had been looking up, with sales increasing 8% in an increasingly competitive landscape.
Then Covid-19 swept across the country.
“It was like hitting a brick wall,” Pepper said.
Sales collapsed. Revenue dropped 95%. Downtown Boston became a ghost town. Stores that saw 600 customers a day instead served just 20.
Today, Boloco faces a situation shared by many small businesses around the country as the ongoing spread of Covid-19 and the acute economic damage in its wake continues to slash revenue, force layoffs and send owners reeling. The business is one of millions that received a Paycheck Protection Program loan from the Small Business Administration — Boloco’s was for $650,000 — but Pepper ultimately spent that money by July 1 to fulfill loan terms at the time, essentially paying workers to stay home as customers kept shying away from indoor dining.
Now as small businesses close at a rapid clip, they see the PPP as merely a stopgap, a short-term emergency economic measure to help them survive, but not designed to fix the wider gaps in business still to come. Congress is departing Washington on a planned recess scheduled to last through Labor Day, and with no stimulus deal in sight, even small businesses that benefited from the PPP are weighing in on what they need from Congress to survive: additional aid.
Boloco itself has just enough cash to make payroll through Labor Day, Pepper said. “It was always a Band-Aid on a gunshot wound,” he said in an interview, describing the PPP. “If they want businesses to actually exist, there has to be relief that gets us through January 2021.”
Small businesses — and the organizations that represent them — have told me and Congress what they need, which includes:
- Additional coronavirus testing. Small-business owners agreed that additional testing will not just help track the spread and current state of Covid-19, but would also help people feel more comfortable returning to businesses and weighing the risks.
- Extend unemployment insurance. The $600 per week in enhanced unemployment benefits created through the CARES Act made it harder to hire back workers. But the elimination of those benefits has hurt many would-be customers as well.
- Extend and expand the PPP. Keep and expand the popular loan forgiveness program.
- Covid-19 liability reform. They are seeking some level of legal shield for liabilities for small businesses that make a good faith effort to comply with local health and safety laws.
- Allowance of a tax deduction. An IRS rule issued over the summer prohibited the tax deduction of expenses that used PPP money, something the NFIB said in a letter to the SBA was “contrary to congressional intent.” Many businesses argue this wipes out the PPP’s benefit otherwise.