The Journal Gazette
 
 
Wednesday, May 27, 2020 1:00 am

Young tries to give small firms more time

Legislation would extend length to use loans

BRIAN FRANCISCO | The Journal Gazette

The husband-and-wife owners of Catablu Grille don't know whether they will keep or return the loan they received in April through the federal Paycheck Protection Program.

Michael and Maureen Catalogna said Tuesday they have until June 8 to spend the money to qualify for loan forgiveness. The U.S. Small Business Administration requires that loans are used by small businesses within eight weeks, a borrower's employment is maintained or restored at levels from before the coronavirus pandemic and at least 75% of the funds go for payroll.  

But states' restrictions on social gatherings aimed at stemming the spread of COVID-19 have curtailed many commercial activities the past two months. After cutting their staff from nearly 50 employees to a dozen while offering only curbside carryout meals, the Catalognas said they are up to 42 employees, although most are working part time as restaurants are allowed to incrementally increase the number of on-premise diners they can serve.

Many prospective customers “are scared still to come out. ... Until that kind of wanes and moves away, it's going to be a difficult recovery,” Michael Catalogna said at a news conference at his restaurant in Covington Plaza along West Jefferson Boulevard.

The Catalognas said Catablu has lost business travelers and groups who would have been celebrating graduations, birthdays and wedding anniversaries.

“We want to use the (loan) money to pay our staff,” Maureen Catalogna said. “We want to use the money to solidify our business. ... We just want to be able to use the funds. We just need more time.”

More time is what legislation introduced by Sen. Todd Young, R-Ind., would give the Catalognas and others like them.

Young and Sen. Michael Bennet, D-Colo., are the sponsors of the RESTART Act, which stands for Reviving the Economy Sustainably Towards A Recovery in Twenty-twenty.

The bill would extend to 16 weeks the loan deployment period for businesses that have experienced revenue decline of at least 25%. It also would establish a new loan program to cover six months of payroll, employee benefits and fixed operating expenses, with a seven-year payback period and a share of loans forgiven based on revenue loss during the pandemic.

“Since government has mandated that people social distance and shelter in place, I think government has a moral obligation to help these engines of our economy. In the United States of America, roughly half of jobs are accounted for by our small businesses,” Young said at the news conference.

He said many Paycheck Protection Program borrowers have “a difficult time reconstituting their workforce quickly enough in order to deploy these monies.” The RESTART Act “provides a longer runway,” Young said.

Financial institutions since early April have made 4.4 million loans totaling $511 billion through the Paycheck Protection Program, including 73,430 loans in Indiana totaling nearly $9.4 billion. Congress authorized $350 billion for the loan fund as part of the Coronavirus Aid, Relief and Economic Security Act, later adding $310 billion after the first round of money ran out.

“This is a very popular program. It's not perfect; we acted quickly,” Young said Tuesday. “One of the improvements we know that we can make to this is increasing the amount of time that small businesses have to utilize these loans.”

The loans are for businesses and nonprofit organizations that employ fewer than 500 people. Maureen Catalogna declined to say how much money she and her husband borrowed.

The RESTART Act states that Congress would authorize “such sums as may be necessary” for the new loan program. Young's office said it has requested an estimate from the Congressional Budget Office. The legislation would provide $150 million so the SBA can update its technologies for the program.

“Congress needs to take the next step and make sure that these essential small businesses remain around and can continue to do business and grow our economy once this economy is able to fully reopen,” Young said.

“The RESTART program is for businesses like Catablu,” he said. “It's for our hardest-hit businesses.”

Young wore a mask during the news conference except when speaking and answering questions from news media reporters standing about 10 feet from him and the Catalognas.

He also scheduled news conferences on the RESTART Act on Tuesday in South Bend and Valparaiso and during the rest of the week in cities in southern and central Indiana. 

bfrancisco@jg.net


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