BOISE, Idaho — The owner of a Boise hair salon closed her business a month and a half ago due to the COVID-19 pandemic.
“We are family-owned, little ma and pa shop,” Express Cuts owner Angie Watts said. “We've been in Boise for a little over 30 years.”
Watts bought the business from her mom and dad about a decade ago. Right now, she employs less than 10 workers.
“We're really just a family, local salon,” she said.
Watts got a Paycheck Protection Program loan three weeks later, but to this day she hasn't spent a dime of that funding.
That money is meant to cover payroll, utilities, and her lease. However, she told KTVB she can't pay her employees right now because they're all on unemployment, and she still can't open her business, according to Gov. Brad Little’s phased re-opening plan.
Her loan was for $29,300. This could cover payroll for eight weeks with the additional money going toward bills.
“Now we're scared to spend the money because after that eight weeks, we don't want to get stuck with a high loan that we have to pay back within two years on top of everything else that's happened,” she said.
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PPP loans are funded by the Small Business Administration. The organization’s website states they'll forgive the loan if all employees are kept on the payroll for eight weeks.
In other words, 75% of the loan must go towards payroll if the loan is to be forgiven. This is where the problem lies with Watts. Her employees are all getting unemployment.
"They're now receiving this extra $600 a week, they probably wouldn't want me to pay them,” she said. “They're making more getting their unemployment then they would if I paid them.”
However, she understands where her employees are coming from.
“It frustrated me the government is doing that,” she said. “Because a lot of businesses are going to be in that place.”
Andy Beitia, regional president of Washington Trust Bank, said Watts isn’t alone in this problem.
“Salon owners, dentists, orthodontists, some businesses are not able to go back to business even if they are able to receive the PPP funds,” he said. “So, it’s made it really difficult for them to utilize the loan program to its fullest.”
He says the loans need to be spent within eight weeks once the money is received by the business owner, not when the business can physically re-open, which is what Watts thought.
“The way the rules are written right now, there isn't a lot of maneuverability in that,” he said.
This is what is forcing Watts to just sit on the money, which could be helping her small business.
“It’s just sitting there, I'm behind two months on my lease,” she said. “Don't want to spend that money because I don't want a loan.”
If she spent the money and didn’t meet the requirements of forgiveness, she would be required to pay back the full loan within two years with an interest rate of 1%. Loan payments will also be deferred for six months.
At KTVB, we’re focusing our news coverage on the facts and not the fear around the virus. To see our full coverage and the latest COVID-19 case numbers, visit our coronavirus section here: www.ktvb.com/coronavirus
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