The phone stopped ringing at Tammy Nelson's auto-body shop in Broomfield, Colo., back in March.
The normally four-to-six week wait for customers looking to have dents or bumps fixed on their cars disappeared, leaving the shop silent. Nelson and her husband, Scott, applied in April for a loan from the Payment Protection Program - the federal government's chaotic $660 billion aid program meant to help businesses and their workers stay afloat.
But the PPP loan had only delayed the inevitable. The phone didn't start ringing again as the pandemic surged across the country. Nelson laid off her five employees at the end of June, including herself and her husband. They are among the first wave of PPP layoffs happening across the country as the loan program begins to expire.
The PPP loan program was intended to be a short-term measure, just like extra $600 unemployment benefits, to help get small businesses through the worst of the pandemic. But, the pandemic outlasted PPP.
Layoffs are beginning to spike again around the country. The number of new unemployment claims rose last week for the first time since March as coronavirus cases soared, spurring cities and states to backtrack on reopenings only a month after appearing to turn the corner.
"It was just a Band-Aid on a bullet wound," Nelson said of the PPP. "All it really did was prolong the agony of having our workers file for unemployment. Whether it's April 15 or June 30, the end result is still the same."
Those losing their jobs in late June and July are part of a wave of new layoffs from companies whose PPP money is expiring, economists say.
"They got PPP loans, and they're now running out, and they're having to make major cuts," said Diane Swonk, chief economist at Grant Thornton who advises several small businesses. "It was the wrong bet. This wasn't just a transitory event."
Although there's no official tally on numbers of layoffs tied to companies whose PPP funding is expiring, the National Federation of Independent Business, a trade association for small businesses, found that 22% of PPP recipients surveyed have or expect to lay off employees after using up their PPP loan, up from 14% in June. A recent report from Goldman Sachs found that only about one in six businesses that received loans said they felt confident they could pay their employees without further assistance.
In recent weeks, layoffs have been reported at the Buffalo, N.Y.-based New Era Cap Co., which received $5 to $10 million, Peoria Charter Coach, a bus travel company that laid of 132 workers - 95 percent of its workforce - after using up the $1 to $2 million PPP loan - at least a dozen museums, including National September 11 Memorial Museum and the Philadelphia Museum of Art, and Rosen Hotels & Resorts, a Florida-based hotel company that received a loan of between $2 million to $5 million.
New Era, the Philadelphia Museum of Art, and Rosen Hotels did not respond to requests for comment.
The Small Business Administration, the agency administering the loans, has been in the spotlight since the creation of the program for the way it doled out loans, which businesses got them (many were not small), as well as the lack of opacity surrounding the troubled loan program. An agency spokesperson declined to answer questions about whether it knew how many recipients had later laid off workers.
But economists say that layoffs due to the PPP's expiration will likely continue to grow as the pandemic's toll continues. The program's term was originally slated to last eight weeks and was expanded to 24 weeks, although it was left up to companies whether to use the expansion.
"There's not sufficient demand to support the employment of people at companies that received PPP," Joseph Brusuelas, chief economist at RSM said. "Investors and legislators should brace themselves for another round of joblessness."
The $660 billion PPP loan program is one of a couple key federal initiatives, along with the extra unemployment benefits, which economists credit with cushioning the financial blow from an economy where an astounding 32 million people are out work.
And like the extra unemployment benefits, which run out at the end of this month, fears are growing about another hit to the economy as the PPP loans continue to expire.
"It basically says the same thing as our outlier status in the numbers of death and infections: We blew it," said Robert Reich, the University of California, Berkeley economist and former Secretary of Labor under President Clinton. "Other countries managed to both contain the coronavirus after three months, and also keep large numbers of workers on payrolls. We didn't do either."
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Workers have been the first to bear the brunt of these convulsions, with some reporting being laid off from companies that had brought them back after receiving loans, only to lay them off a second time when the money ran out.
"It's just kind of one of those things where, just the way everything counts out, no matter what I do, I'm screwed," said Reidun Saxerud, 33, a part-time assistant Kirkland Productions, an entertainment booking agency in Los Angeles. Saxerud was laid off at the end of June - the second time since March - after her company exhausted its federal funds.
Saxerud has experienced the full swing of the pandemic's ups and downs.
She was laid off in mid-March, as the virus emerged in force, then brought back to the agency in May, as generous government programs like the PPP and restrictive public health measures helped fuel hopes about a quick economic recovery.
Knowing, now, that the company was only able to pay her temporarily on the government's dime, a sign the company had not come close to recovering, Saxerud wishes she had just been able to stay unemployed the whole time. She missed out of the bulk of the period when the extra $600 in unemployment insurance was available.
Brian J.K. Regan, the company's operations director, confirmed the layoff, saying the small company - he's the only current employee, besides its president - had to cut payroll once its PPP funding ran out.
Sean Malone, 37, a restaurant worker and adjunct professor, also was effectively laid off for a second time from Waldo Pizza, a restaurant in Kansas City, Mo., after the business ran out of its PPP funding.
Malone, who has an eight-month-old baby at home, said he, too, felt the PPP had a net negative effect for him, forcing him back to work during a dangerous time, at the risk of losing unemployment insurance if he refused and preventing him from taking advantage of the generous jobless benefits while they were available.
Steven Kingery, the owner of the restaurant, said in an email that of all of the approximately 109 employees the restaurant had before the pandemic, have either been laid off or had their hours reduced since the $525,000 PPP loan the company received was depleted.
Tina Lyons, 53, the owner of Double River Forwarding LLC, a logistics company that deals with international agricultural exports in Portland, Oregon, told her four employees at the end of June that she was going to have to cut their hours because $33,000 she had received from the government had run out. One employee quit at that point, she said.
She blamed Washington for a dysfunctional climate that failed to fully insulate companies like her from the potential of economic ruin.
"Our political leaders have no clue what small business are. They have no idea what we struggle with," she said. "It matters to me if I walk three or four blocks all the stores are gone. It needs to matter to them, too."
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Economists have been debating whether the PPP program worked as it was intended.
When Congress created the payroll support program back in March, it was intended to last for eight weeks, assuming the virus would be contained by early summer and that life would be getting back to normal. The realities of the pandemic turned out much worse than many hoped.
PPP stimulus saved between 1.5 and 3.5 million jobs, according to a study done by researchers from the Federal Reserve, Massachusetts Institute of Technology and the ADP Research Institute that looked at program data through the first week of June. That was before the funds began to run out for many businesses, and before rising cases touched off a cascade of shutdowns, closures and layoffs in recent weeks.
Yet with coronavirus cases swelling in many regions across the country, and daily cases nearly double in mid-July compared to the first peak of infections in April, the return of the economy appears to be more tightly tied to vaccine development, rather than containment.
"PPP was focused on keeping businesses alive and reducing burden on the unemployment insurance system," said Daniel Alpert, an investment banker at Westwood Capital LLC, who's been studying the issue. "It did both of those, but for only eight weeks. But that's gotta be the thrust of any story here. It worked."
Reich disagrees, saying he does not believe the program should be considered a success, citing the hefty premium - about $10 billion in fees - banks were paid for offering a loans for which they assumed no risk, issues that minority and women-owned businesses experienced securing loans, and the flood of applications that overwhelmed banks and the SBA alike.
Instead, Reich pointed to Europe, where countries had used a different model: universal payroll aid that saw governments paying as much as 80 percent of workers' salaries to keep them on payroll for a longer time, which has kept more businesses afloat and less people out of work.
"If we knew in March and April how long the pandemic would last, and how badly the Trump administration would bungle testing, tracing, and isolating COVID cases, the overall program would have been much more ambitious," Reich said. "It would be a universal program of payroll support. It would go through January. And it would not depend upon banks or the Small Business Administration."
Swonk, of Grant Thornton, also said the lack of a national program of testing, contact tracing and other public health measures had haunted the PPP and other attempts at economic recovery.
"Congress has been unwilling to deal with the larger issue," Swonk said. "This is not just about death rates. It's about health of the labor force, and customers coming in and not being afraid. We have to stop denying the reality."
Swonk said the United States is at risk of losing millions of businesses permanently to the virus, potentially hampering whatever recovery does eventually emerge.
"If we want to have more of a foundation from which to rebuild, we need to maintain businesses in a way that may not be that comfortable," she said. "The alternative is a much more diminished, less dynamic economy with less ability to generate or recover jobs going forward."
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Alpert, the investment banker, said that he believed workers being rehired because of the PPP is one of the reasons the unemployment rate dropped in May and June, after historic spikes before that.
But the elevated number of new unemployment claims every week for the last month - which has stubbornly remained around 1.4 million newly applicants a week on average - is an indication that the U.S. is already feeling the pain from the PPP's expiration, he said.
"The reason you still have hundreds of thousands of new unemployment claims each week in states that still have surges, where you're opening the economy, to me tells me there's something else afoot," he said.
Back in Broomfield, Colo., Nelson says she doesn't have much hope that her business will return until there's federal leadership about the public health aspect of the pandemic.
"If we would have said, OK, we're sending out this PPP money, and we're locking everybody down for 60 days, we're gonna make this virus go away and then we're going to reopen, I think we would have been a lot better off," Nelson said. "That money would have done more good because now, all it is, is just limping along. It's like a string of bread crumbs for a bird."
In the meantime, she and her husband have taken up the ancient art of praying to the weather gods, in this case for hail, which typically sends a rush of customers with dented hoods their way. Her husband still heads to the shop every day in case customers show up.
The pandemic, she fears, is "just going to decimate mom and pop shops throughout the country."
"The bottom has dropped out," she said. "What are we all supposed to do now?"