Amid Dire Jobless Numbers, Small-Business Relief Program Nears End

Small businesses employ nearly half of America’s nongovernment workers, and the paycheck program preserved at least 1.4 million jobs through early June, a recent economic analysis concluded. More than five million companies received loans, averaging $102,000 each.

There was a frenzied rush when the program began in April: The fund’s initial $342 billion ran out in just 13 days, stranding hundreds of thousands of applicants and prompting Congress to add another $310 billion. A chunk of it went fast, but months later, more than $125 billion remains unspent.

Lenders said demand slowed because nearly every eligible business that wanted a loan was, in the end, able to get one. But as the economic downturn became prolonged, strict rules about how the cash could be used also made P.P.P. loans less attractive for some business owners. For a loan to be forgiven, most of the money had to be used to pay workers, rather than on other expenses like buying protective equipment or renovating spaces to accommodate social-distancing rules — which became more important for businesses trying to adapt to the new reality.

Jon Winick, chief executive of Clark Street Capital, a firm that advises lenders, called the program a “successful bipartisan effort.” It was created in a hurry based on expectations that the economic recovery would be “V-shaped” — with a sharp dip, followed by a sharp rebound within a brief period — that eventually proved wrong, he said. However, the program “did provide a bridge for thousands of businesses to stay in the game long enough to make it to the other side,” Mr. Winick said.

A bridge was exactly what the relief loan provided for Bob Starekow, the co-owner of two restaurants in Frisco, Colo., a resort town with heavy winter and summer tourism. The P.P.P. loan he got in May allowed him to keep paying his 28 workers while his restaurants, the Silverheels Bar & Grill and Kemosabe Sushi, were closed.

They reopened in June, and business is running profitably, although at a smaller scale, Mr. Starekow said. To cut costs, he slashed his menu. His restaurants could seat about 200 people indoors, but are now mainly using their 90 outdoor seats. Mr. Starekow has not had to lay anyone off, but he has not hired the 20 or so additional people he normally would to handle the summer demand. He worries about what cooler weather will mean for foot traffic.

“I’m not concerned about up or down with revenue,” Mr. Starekow said. “I’m concerned about broke or not broke.”