Howard Schultz said Tuesday that additional funding for the Paycheck Protection Program is not adequate to help small restaurants survive the coronavirus pandemic.
“What’s needed is not another version of PPP. Again, good intent but it’s the wrong medicine,” the billionaire former Starbucks CEO said on “Squawk Box.”
Rather, Schultz said he believes the government needs to create a robust program to serve as a “bridge to a vaccine.” The price tag may be around $1 trillion, he said. ”It’s large. I understand it.”
But he argued the cost of the program will be “much, much less” than the cost of more than 100,000 small restaurants potentially closing for good due to the coronavirus crisis.
Millions of Americans would then be out of a job, Schultz said. “Not to mention the social fabric of every community which the independent restaurant is so linked to.”
Schultz’s comments Tuesday came as the Senate looked to add funding for the small business loan program, which last week exhausted its initial $349 billion. Senate Minority Leader Chuck Schumer said Tuesday he believes the upper chamber will approve additional funding later in the day.
Schultz said a lot of the small restaurants do not have strong, existing relationships with banks, which hurts their ability to access the initial batch of PPP loans.
Schultz said the program he ultimately envisions does involve the government backstopping loans to smaller restaurant owners.
However, loans made through the PPP are not large enough to sustain restaurants for the duration of coronavirus-related revenue slowdowns, Schultz said.
A business can get a loan worth up to 2.5 times its average monthly payroll expenses.
“PPP is just a Band-Aid. None of these companies can make it through,” he said, arguing that “restaurants are probably going to operate at 30% to 50% capacity for a couple of quarters as things become normalized.”
“That is why they need a bridge to the vaccine because they won’t be able to operate effectively because there will be very little profits,” he said.