The federal government came to the rescue a year ago when COVID-19 slammed the economy forcing social distancing protocols that stopped many businesses in their tracks.
But it was Eastern Bank, Bank of America and other local banks that made sure the feds’ outstretched hand reached and caught free-falling businesses.
The bottom line good news amidst a pandemic is that Payroll Protection Program (PPP) loans saved thousands of businesses by keeping their workers employed.
Eastern, Bank of America and other banks made sure $14 billion from the Small Business Administration got into the hands of 118,000 Massachusetts businesses. The federal money combined with hard work by banks saved more than 1.1 million jobs in Massachusetts.
Unfortunately, as two hard-working women entrepreneurs can attest (Item, March 5) PPP is not a one-size-fits-all salvation. Soul City Yoga applied three times for PPP only to have their applications rejected.
Why? Because its 14 yoga teachers are independent contractors who are not payroll employees. Soul City Partners Shanel Anderson and Sara Bailey cut pay and reduced their class offerings to keep their yoga business alive.
They were told their teachers could apply on their own for PPP but Soul City could not apply for the program because the teachers are not considered employees. The rules are the rules and gigantic aid programs like PPP are tough to craft with a one-size-fits-all goal in mind.
Yoga studios are just one among many types of businesses with independent contractors. Because they are gig workers who are only affiliated with a studio like Soul City, the teachers have the option to work for other studios and they have flexibility in scheduling classes.
This arrangement offers personnel and payroll management advantages to yoga studios and other businesses relying on independent contractors. But it obviously presented disadvantages when COVID-19 hit and the Payroll Protection Program debuted with specific rules applying to independent contractors.
Banks, including Bank of America and Eastern Bank, are required to follow those rules.
Fortunately, both banks and many others have community-oriented lending programs that allow them to be strong financial partners with firms like Soul City and other small businesses demonstrating a commitment to help make Lynn thrive.
