Coronavirus PPP loans are 'short term band-aid,' former Starbucks CEO says
Roughly 30 million small businesses in the US generate about 44 percent of economic activity
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Former Starbucks CEO Howard Schultz is calling on the federal government to provide more financial aid to the thousands of restaurants and small businesses in the United States whose operations have been hobbled by the COVID-19 pandemic.
Schultz said the government's Payroll Protection Program is only a short term fix and isn't enough to keep small businesses open for the long-haul after the pandemic subsides.
"PP1 and PP2 is just a short term band-aid that will run out of money in the next seven to eight weeks," Schultz told FOX Business' Neil Cavuto on Monday. "And when businesses reopen they will be forced to close by Labor Day."
HOW DID THE PPP LOAN MONEY RUN OUT SO FAST?
A staff of Dengeos restaurant passes a curbside pickup order to another staff member in Buffalo Grove, Ill. on Saturday, April 25, 2020. (AP Photo/Nam Y. Huh)
On Friday, President Trump signed a $484 billion coronavirus relief aid package that supplied the program with $310 billion in fresh funds after it ran out of money earlier this month.
The program was designed to incentivize companies with fewer than 500 employees to keep staff despite difficult economic conditions. However, the program exhausted its lending limit after approving nearly 1.7 million loans.
The roughly 30 million small businesses in the United States generate about 44 percent of economic activity, according to the Small Business Administration.
PPP CORONAVIRUS LOANS: FORGIVENESS MAY NOT BE AS SIMPLE AS BUSINESS OWNERS THINK
Schultz fears these businesses will not have enough money after funds from the program run out for the second time.
"Were going to be facing a situation by Labor Day in which 20 to 30 percent of small businesses and independent restaurants in the entire country are going to be forced to permanently close," he said.
Schultz, who had a 36-year career with Starbucks after joining in 1982, said if the coffee chain was faced with a similar situation that small businesses are now facing, it would not have made it.
The former Starbucks exec had his own foray into the political arena -- he announced in January 2019 he was running for president, but due to health concerns and after being criticized for potentially taking votes away from the Democratic nominee, Schultz abandoned the bid months later in September.
The Associated Press contributed to this report.