Local banks help businesses secure millions in payroll protection loans

The Daily Sentinel
April 11, 2020

By Charles Ashby

HopeWest won’t have to lay off any of its workers because of the COVID-19 pandemic thanks to a special business loan program approved by Congress late last month.

That is possible, at least for now, thanks to the newly created Paycheck Protection Program that was part of the $2.2 trillion Coronavirus Aid, Relief and Economic Security Act that Congress approved late last month.

In it was a new $349 billion emergency loan program under the federal Small Business Administration.

As a result, the nonprofit that provides palliative and hospice care to the extremely ill and dying was able to secure a low-interest $4.4 million loan that is to be used to pay workers.

Think of it as a bridge to get through a difficult time, says Christy Whitney, president and chief executive officer of HopeWest.

“We predicted our loss of revenues would be over $1 million, and that’s just for a few months,” Whitney said. “Without this loan, I don’t think we would have remained in business. I also thought if I just started getting very alarmed and started closing down programs and laying off people, we wouldn’t have survived that either.”

To get that loan, Whitney worked with Timberline Bank in Grand Junction, which has years of experience helping businesses get loans.

Jim Pedersen, co-chief executive officer of the bank, said his employees have been working all hours of the day, including weekends, getting applications filled out and submitted to the SBA.

To date, the bank has helped get nearly 300 applications approved, securing about $77 million in loans to local businesses and certain nonprofits. The bank has at least 200 more in the works, with more coming every day.

Pedersen estimates that adds up to about $100 million so far that’s going into the local community, and that’s just from his bank.

“It seems like we’ve been working on this for a year, we’ve done so much work with it,” he said. “About 2 1/2 weeks ago, they started talking about this program. As we had some clarity on it, we went out to our customers and let them know that we thought this was a really big deal and we wanted them to apply.”

The bank estimates that its helped about 9,500 households in the region so far.

According to the SBA, the loans are on a first-come, first-serve basis, so applicants in the Grand Valley are competing with millions of other employers nationwide. The global financial investment bank, JPMorgan Chase, estimates that about 99% of the nation’s 29 million companies are small businesses, which are 500 or fewer employees. The vast majority of them, about 88%, have 20 or fewer workers.

The SBA program allows potentially forgivable loans of up to $10 million at a 1% interest rate. Any individual loan depends on a business’ weekly payroll, and are meant to help them meet those payrolls instead of laying off or furloughing workers.

To ensure that businesses don’t take the money to pay expenses other than payroll — they are allowed to use a portion for such costs as mortgage or lease payments or utility bills — they are reviewed again in eight weeks. If their weekly payroll costs go down either through staff or salary reductions, those businesses are required to pay back the difference, according to the SBA.

The loans are provided without collateral requirements, personal guarantees, SBA fees or the ability to get credit elsewhere.

Pedersen said the program is like preventative medicine for the economy, which has been devastated by the pandemic. Getting money into the hands of businesses now can help prevent them from going under, and further damaging that economy, he said.

“All this money put into the economy and put into the local economy will hopefully prevent (loan) write-offs in the future,” Pedersen said. “We’re hoping this helps bolster the whole economy and everyone can avoid losses.”

Pedersen said he’s been trying to get information about how much of the $350 billion still is available for loans, but hasn’t found that out yet. That’s important because when that money runs out, unless Congress approves more, the program is over.

“We’re trying to get 50 applications done a day through the end,” he said. “We’re a tiny bank and we’ve done $100 million. I would guess (other banks) have eclipsed us, but the percentage of customers we’ve reached, I think we’re way, way ahead of everybody.”

Because of the great demand for the loans, congressional members are already calling on more money for it.

Both of Colorado’s senators said Congress needs to approve additional funding soon, and some of it also needs to be targeted to help other entities, such as rural hospitals and local governments.

“Although the recent emergency package provided much-needed relief, we need to do a lot more to support Colorado’s families, workers and health care system,” Democrat Michael Bennet said.

“The Paycheck Protection Program is one of the most important aspects of the CARES Act and we must do whatever is necessary to keep it running and funded,” added Republican Cory Gardner. “Small businesses in every corner of America are applying for this support to keep our economy moving and workers on payroll, but Congress must provide more funding.”

To learn more about the program, go to www.sba.gov, or to apply for a loan, contact your local bank.

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