The squeeze is squeezing the owners of restaurants, gyms and other small American businesses that are trying to hold on until the economy is fully reopened. And unlike most large companies, the burden is often deeply personal.
Townsend Wentz borrowed from his family to open his first fine restaurant in Philadelphia in 2014. The chef took advantage of his home equity, erased any appearance of a retirement account, and diverted college funds to his daughter in his business. About $ 1.5 million in personal investment is now at stake. The pandemic has repeatedly closed its five locations during parts of the year.
In addition, Mr. Wentz, 53, has a personal guarantee at a location that makes him responsible for about $ 540,000 in five-year rent payments and an additional $ 175,000 for a drink license. The guarantee weighs on Mr. Wentz as he juggles phone bills, tax obligations, rent payments and other expenses.
“It’s like trying to stay in quicksand,” he said. He hopes to have all of his restaurants reopened this month.
Small business owners who take on debt or sign a lease often end up offering a personal guarantee, in which they promise to be responsible for payments if the company is unable to pay.