Cleveland business owner worries she won’t meet qualifications for PPP loan forgiveness as employees draw unemployment

PPP loan requires that employers spend money on payroll within 8 weeks of receiving it.

Cleveland business owner worried she won’t be able to meet qualifications for PPP loan forgiveness

CLEVELAND, Ohio (WOIO) - A local business owner says it’s going to be tough to bring her employees back, because of what they’re currently getting from unemployment.

The halls of all 12 Le Chaperone Rouge day care locations are dark. The classrooms are quiet. And, the toys are put away.

Before the buildings emptied out at the end of March though, Stella Moga-Kennedy applied for a PPP loan.

“Then I would have the money to pay my employees without being on unemployment,” she said.

But, the loan took a month to come through and she was forced to lay off hundreds before receiving it.

Now, she needs part of the loan money to pay utilities.

She’s having trouble figuring out how to meet the requirements to get loan forgiveness.

The terms of the loan say that business owners have to pay 75% of the money to employees on payroll within 8 weeks of receiving it.

“In order for me to have the forgiveness of the loan, it will take 198 teachers to come back,” Moga-Kennedy said.

Most of those employees are now on unemployment though. They’re getting money from the state and the extra $600 per week provided in the Cares Act.

“They make double what I would pay from this loan and what they made before," she said.

So why would they agree to get back on the day care’s payroll?

“I cannot tell them, 'come back and I’ll pay half of what you make on unemployment,” she said.

That’s an issue ODJFS Director Kim Hall says her office anticipated when the Cares Act passed.

“What we’re emphasizing to folks is that $600 a week payment ends July 25,” Hall said. “It’s short term.”

But again to get loan forgiveness, Moga-Kennedy needs to pay out her money by that same week.

“We need time,” she said.

She needs time to pay out the hundreds of thousands to employees as she gradually sees the need to add them back to payroll.

“I need many more weeks to bring employees gradually in my schools,” she said.

State officials have urged employers to report employees refusing to come back to work when businesses do open back up.

We are still waiting to learn when day cares will open. We expect to get that information Monday.

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