Keeping the lights on for small businesses in Massachusetts

All three restaurants on Boylston Street — McGreevy’s, The Pour House and Lir — closed within one month of each other. Photo by Elizabeth Dustin/BU News Service

By Keminni Amanor
BU News Service

BOSTON – “We are surviving.” That is how Adam Romanow, co-founder of Castle Island Brewery, described the state of his company based in Norwood. He said he’s worried surviving may no longer be an option if the federal government fails to send some financial assistance his way. 

The concerns for business owners like Romanow are playing out as Washington appears to be finally moving toward approving a relief package.

Romanow’s company has benefited from low-interest loans from the Small Businesses Administration. Of the $400,000 he’s received, $150,000 came from the Economic Injury Disaster Loan Program, while the rest was from the Paycheck Protection Program.

Romanow said he was able to recall furloughed staff and has kept all 35 of them, although that money is long gone. 

“We’ve been fortunate not to lay anybody off, but we aren’t seeing as much overtime being accrued by our people,” he said.

Additionally, Castle Island Brewery’s production has shrunk overall. Production went down by 40%, partly due to the closure of bars and restaurants that bought their products in bulk.

“[About] 50% of the distribution of beer is sold in bars and restaurants,” Romanow said. “So not having those channels open or performing at the usual levels has definitely been a challenge this year.”

With the onset of winter and no specific reopening date in sight for bars and nightclubs, production could dip further. In real terms, Romanow said his business lost about $500,000.

Even though the brewery now buys “raw materials a little more conservatively,” production costs have remained high, in part due to more frequent cleaning requirements. Romanow said COVID-19 protocols take up a lot of time and cost more money, requiring expenditures on things like air filters and cleaning supplies that weren’t necessary before the pandemic.

“We sanitize pretty much every surface in the building twice a day, seven days a week,” he said.

But curbside purchases alone are not enough to keep the business afloat if no financial assistance reaches them. Romanow hopes for additional federal assistance.

One version of a congressional package called for up to $908 billion to assist Americans during this period, according to documents released by a bipartisan group in Congress.

Of this amount, $300 billion would go into a second round of PPP for small businesses with a special mention of restaurants, live venues and EIDL grants, according to the documents, which noted there will be a simplification of loan forgiveness for PPP loans less than $150,000.

In the first package, some 118,000 small businesses in Massachusetts received about $14 billion in PPP, according to Robert H. Nelson, director of the Small Businesses Administration. Nelson said about 60,000 other businesses accessed $3.5 billion in long-term and low-interest loans from the EIDL. 

“We still have appropriations for the Economic Injury Loans Program that expires on Dec. 21 unless something gets extended,” Romanow said.  

But when the next aid package will arrive remains largely unclear, putting the lifelines of businesses and the livelihoods of their employees at risk.

Romanow, who doubles as the treasurer of Massachusetts Brewers Guild, said many of his peers are having a really difficult time.

“I wish that the two sides of Congress would sit down and work out a deal and not leave the room until it’s done because we need it,” he said. “Our customers need it, our employees need it and I am getting pretty tired of the bickering in Washington.”

The brewers guild isn’t the only group of retailers frustrated at the lack of progress toward a relief package.

“Government needs to realize that there needs to be some kind of compensation for these small businesses,” said Jon Hurst, president of the Retailers Association of Massachusetts.

“What is happening down at D.C. is just abysmal. If they go home for Christmas without a new round of PPP, I think they all ought to turn away their paycheck or we should vote them out because this is not how government aught to operate,” Hurst told the State House News Service’s State House Takeout podcast.

Earlier this month, Gov. Charlie Baker announced a rollback of the state’s reopening plans to Phase 3, Step 1, owing to a rise in the number of COVID-19 cases and hospitalizations.

This rollback reduced the occupancy limits for all businesses, including gyms and retail stores, from 50% to 40%. It also required all restaurants to reduce indoor dining capacity to six per table for a maximum period of 90 minutes.

Bob Luz, president of the Massachusetts Restaurants Association, told the State House News Service that while new occupancy limits are the right thing to do, it will affect businesses in the food industry differently.

“We would prefer to have no further restrictions, but we are pleased he didn’t go further,” Luz said of the new reopening guidelines, and that recent data on the source of positive cases indicates that restaurants and bars are responsible for less than 1% of infections.

In Massachusetts, more than 3,000 restaurants have closed and about 100,000 restaurant workers have not been able to return to work, according to the Massachusetts Restaurants Association, which also said the year began with 15,000 active locations and more than 300,000 active staff.

“People thought it was going to be a one month issue but here we are. It’s December,” said Steve Clark, director of government relations for the Massachusetts Restaurants Association. “We are still not open, we are still not functioning.”

As of 2018, the Small Business Association estimated that there were more than 650,000 small businesses in Massachusetts. This figure represented about 99.5% of all businesses statewide, and the sector employed about 1.5 million people – nearly half of all the workforce statewide.

In the same year, sales from across the state generated nearly $2 billion in taxes, according to the Massachusetts Restaurants Association.

Despite their contributions to the state economy, relief packages at the state level have not been enough according to Clark. He said he is hopeful an economic development bill currently in a Statehouse conference committee will provide some specific assistance to the industry.

Sen. Eric P. Lesser, D-Longmeadow, said there are some “significant tools” in there to provide some assistance to businesses. 

“There are multiple restaurant specific funds in the economic development bill,” Lesser said as he reiterated the fact that the bill was still in negotiations.

In June, Massachusetts unemployment levels peaked at one million, double pre-pandemic levels. With September unemployment at more than 365,000, nearly every industry has felt the impact of the crisis, especially the hospitality sector. Lesser said this also disproportionately affected minority communities and groups.

“We are working aggressively on the state level to work to support these communities,” he said.

He said some of this work included statewide removal of the waiting period before people could receive unemployment insurance and expansion of the timeframe within which people could get unemployment paychecks back in April.

Legislation was also passed to enhance benefits for the lowest wage workers by providing a supplemental payment of up to $1,800, according to Lesser. Additionally, he said the budget – as approved and returned by the governor – should provide some financial relief to small businesses.

Consequently, the Baker administration announced some $50.8 million to small businesses, microenterprises, and their employees. This same package is expected to assist families and communities. 

In total, the administration assigned about $115 million in relief funds to small businesses hardest hit by the COVID-19 pandemic.

Even with an end of the pandemic in sight, there are lingering questions about what relief may come to help struggling industries and when. Although vaccines have been approved for use, experts say it may be next spring or summer before it will be widely available.

The Bay State is expected to receive some 60,000 vials of the vaccine which will first go to health care workers and residents and staff of elderly homes.

With no statewide vaccination available yet, no approved funding from Congress and limited assistance from the state, businesses are facing a dire situation going into the winter.

Romanow said he may have to reassess his business going into the winter. For the past few months, his business has relied on curbside purchases, distribution to liquor and grocery stores, and using the extra space to brew for other companies.

But not everyone has been as fortunate.

While closures have not been as drastic as expected thanks to federal assistance, he said, some members of the brewers’ guild have had to shut down.

“What keeps me up at night … is that this very difficult but hopefully temporary situation creates lasting irreparable damage,” Lesser said.

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