The Federal Small Business Administration and banks across the country are at the forefront of efforts to secure nearly $ 350 billion in secured loans for paycheck protection to small businesses that have been devastated by the economic fallout from the coronavirus. .
According to The data According to the SBA on Thursday, more than 18,000 Oregon companies were approved for paycheck protection program loans, amounting to $ 3.8 billion. The program ran out of money Thursday, but Congress is working to provide an additional $ 250 billion, the Washington post reported.
From record stores to electric vehicle manufacturers, Eugene’s businesses are asking for loans as their operations have slowed down and employees have been put on leave.
Here’s how the program works: SBA loans are distributed through banks, according to The New York Times, and borrowers will be forgiven if they use up to 75% of the money to maintain full-time pay rates before the pandemic for eight weeks.
The loans are guaranteed by the SBA and banks won’t have to keep them on their books unless they are not forgiven, said Jenny Bennett, spokesperson for Eugene-based Summit Bank.
PPP loans are part of the $ 2.3 trillion CARES law passed by Congress in late March. Other parts of the CARES Act include one-time checks of $ 1,200 to Americans earning up to $ 75,000 per year; however, the wording of the bill excludes those who could be claimed as dependents.
Portland-based Umpqua Bank is one of several banks across the country helping businesses roll out PPP lending.
As of Thursday, April 9, Umpqua had received more than 7,000 applications for the program and as of Monday, about 2,000 of those loans had gone through the process, said Eve Callahan, Umpqua’s director of communications.
“The minute [the CARES Act] was signed, we put together a SWAT team that worked tirelessly for a week to prepare us to accept applications, ”Callahan said. “The demand is just incredible. “
Callahan said as of Monday more than $ 550 million has been distributed to applicants and Umpqua has seen demand from companies across industries but retail, hospitality and restaurants have been “incredibly hard hit” by the economic disruption of COVID-19.
Statistics from the SBA show that the accommodation and food services sectors accounted for 8.9% of all funds distributed to businesses across the country.
“We understand the incredible disruption to small businesses across the country. Small businesses are the lifeblood of the US economy and our number one priority at Umpqua is to help them get through this crisis, ”Callahan said. “We have been asked to play a vital role and we want to do it,” she said.
Summit Bank, which focuses on business loans, is in a similar position to Umpqua: things are busy and employees are working around the clock.
Summit has received hundreds of applications since the program opened on April 3, and while the bank doesn’t have final figures on how many loans have been approved, it has “helped a few thousand people in Eugene / Springfield keep their jobs or to go back. work, ”Bennett said.
David Bong is one of those people who received a loan for his company, Avant Assessment, which offers oral, written, verbal and auditory skills tests for 36 foreign languages. A major source of revenue for Avant is providing these tests to school districts across the country, many of which are now closed due to COVID-19.
“They’re all closed and it’s our peak testing season, in the spring. We had to be very nimble and find new ways for students to take the test and take it at home and keep the integrity and value of the test, ”Bong said.
Avant employs around 40 people, and Bong said that while management suffered a 40% pay cut, its employees did not. He applied for a PPP loan through Summit, which he described as “critical funding at a very important time.”
“We really needed the loan to make up for lost sales. Thanks to that, we were able to keep everyone on the payroll at full pay, ”he said, adding that community banks“ are turning their backs on the businesses of [a way] the big banks would never do it, ”because they have to build and nurture relationships with businesses in their community.
Long waiting times and uncertainty for some
On the other hand, some companies have not yet had the same success in being approved to receive the loan.
Matt McCallum, deputy director of House of Records, recently received an email from Columbia Bank saying there was still room to apply for a PPP loan. But within an hour, he said, the bank reached 12,000 requests and stopped accepting more, and instead offered the names of several other possible banks that the company could file an application with.
House of Records fired its staff early to protect its bank account during the uncertainty of money for an emergency fund, McCallum said. Because of this, he now has money to help laid-off employees with expenses like rent, groceries, or bills if they need them.
“I would do anything to be able to pay them whether they come to work or not,” he said, adding that if House of Records got a loan, it wouldn’t force them to come to work.
“If they want to stay home, they can stay home. I just don’t want them to struggle.
Edward Schiessl, general manager of the Broadway Metro theater, said he had laid off all of his staff of 20 “at least temporarily” and would like to be able to rehire them all, but “there are a lot of variables” involved – at find out, when the theater will be allowed to reopen and whether there will still be restrictions in place on its capacity and “when people will feel comfortable with large gatherings, regardless of when the order to stay at home is canceled “.
Schiessl said he requested the PPP and Economic Disaster Lending programs from the first few days they became available.
“At this point, I’m not even sure if I will accept P3 funds if they are awarded,” he said, citing the fact that under P3 rules Broadway Metro should rehire all of its staff immediately. for a certain time. that it is “legally prohibited to operate”.
About 75% of PPP funds would have to be spent to pay non-working staff, he said, but the remaining 25% for rent and utilities would only cover about two weeks of rent for the theater.
Schiessl said there is a “very real possibility” that PPP funds will not be forgiven as there are “no clear guidelines” on the process. “I’m not keen on racking up debt to rehire staff that I don’t have a job for,” he said. “That’s what unemployment insurance is for. I don’t know how this is supposed to help someone in its current form.
In order for the loan to be canceled, borrowers must submit a cancellation request to their lender, which includes documents that verify employment information and payments for mortgages, utilities and leases, according to the Treasury Department. Decisions as to whether the loans will be canceled must be made within 60 days by the lender.
During the eight-week loan cancellation period, starting on the day the loan is disbursed, he said Broadway Metro would need to show similar employee numbers and payroll costs to its historical monthly average to be eligible for cancellation. But since the theater is not allowed to operate, he said, “this is a completely unrealistic requirement.”
Schiessl later said he received a notice that his application was being processed on April 14. He applied to the Broadway Metro credit union, he said, but he appears to have “outsourced the process to a third party,” so he doesn’t know who the lender is. eventually will be.
Eugene-based electric vehicle maker Arcimoto said in its Tuesday Annual Report filed with the Securities and Exchange Commission that it has laid off 74 of its 95 employees and suspended production of its “fun utility vehicle.”
The company applies for the PPP loan as well as the disaster relief loans and focuses its efforts on production.
Arcimoto declined to comment on the history of the emerald.
About a third of Tsunami Books’ staff have recently been made redundant, and Chairman and CEO Scott Landfield has called “many times” for PPP but said “banks are slow” and most of them “don’t.” have not yet together. . “
Although bookstores were not among the businesses required to close in Gov. Kate Brown’s executive order, Landfield said Tsunami Books is closed except for curbside pickup two days before the order is due for security reasons. He said whether or not granting a PPP loan to the bookstore will be “the difference between staying open and closing.”
The potential of $ 20,000 to $ 30,000 that the bookstore could receive from the loan would be “huge” for a “small business,” he said.
Tsunami Books has organized over 5,000 events for music and literature, and Landfield said, “This is what has driven Tsunami all these years and it’s over now, it’s 100% gone.
He said he had to cancel 45 events that were scheduled for April, May and June. “I had to work hard to organize these events – it was my best effort – and then cancel them in one day,” he said.