The federal government’s Paycheck Protection Program has pumped millions of dollars into the local economy since early April. With more than $100 billion still available, the application period for the program is currently scheduled to end June 30.
The PPP loan program was designed to help small businesses weather the COVID-19 storm during business closures and stay-at-home orders, while providing guidelines for having up to 100 percent of the 1 percent interest loans forgiven.
The loan program was designed to cover the cost of company payrolls for two and half months. Changes implemented June 5 allow for an additional four-month period to use the funding under new and more flexible guidelines.
Zions Bank alone processed nearly 200 PPP loans in the Wood River Valley, totaling over $24 million, according to Zions Bank Public Relations Officer Malcolm Hong. Zions Bank Regional President Tracy Groll, based in Ketchum, said issuing the loans marked an unprecedented moment in banking history.
“I have never seen anything like it,” Groll said. “Thousands of loans were made within a few weeks without getting financial statements, or even knowing some of our clients very well. I don’t know of any company in this valley that did not apply for a loan.”
Groll said the situation was made more palatable by the fact that the federal government agreed to have the loans guaranteed by the Treasury Department. But soon it will come time for companies, nonprofits and sole proprietors to seek “forgiveness” of their loans. The new regulations will make that easier for some businesses.
Groll said the timing of the shutdown in April and May couldn’t have been better for some businesses, since it coincided with “slack,” or the off-season. For others, like the Knob Hill Inn in Ketchum, it created challenges.
“The loan was very helpful, but it was hard to use the money during the initial eight-week period,” said Jolie Dunn, co-owner of the hotel and its restaurant, The Grill at Knob Hill. The business received a PPP loan through D.L. Evans Bank.
Dunn said that during a two-month business closure that ended for her on May 22, the restaurant went from 45 employees to a paid staff of seven, whose paychecks were covered by the loan.
The National Restaurant Association was “instrumental” in getting the new 16-week extension on the payroll forgiveness period, as well as a smaller requirement for payroll expenses, Dunn said. The initial terms for PPP loan forgiveness required that employers spend at least 75 percent on payroll and keep the same number of workers employed as before the pandemic, at the same wages. The other 25 percent could be spent on utilities, rent and other expenses.
The new changes implemented this month call for a 60/40 split.
“Now we can use the money while we are actually open to make sure everyone is getting paid their full amount,” Dunn said. “It also allows us to open with more confidence that even if we get another spike in the coronavirus, we will still be able to pay our people.”
Mason Frederickson, a commercial loan officer at the Ketchum branch of D.L. Evans Bank, said the Hailey and Ketchum branches processed over 260 PPP loans for more than $19 million to local businesses in a variety of industries. Borrowers can still use the eight-week coverage period, as the program was originally written. But Frederickson said the changes reduce the risk of a reduction in loan forgiveness for borrowers who are both unable to rehire workers from before Feb. 15 and unable to hire similarly qualified employees for unfilled positions by Dec. 31.
“The flexibility is important because each business is different,” Frederickson said. “One business might be able to spend 100 percent of their PPP funds on payroll, and another may only need to spend 70 percent of their PPP funds on payroll. The same goes for the timeframe a business may need to spend their PPP funds.”
Mark Palmer, CEO of Webb Landscape, obtained a PPP loan from Zions Bank.
“I was surprised at how much money we got,” Palmer said.
Palmer said Idaho’s stay-at-home order coincided with the start of Webb’s spring season. The loan allowed him to double his workforce and get to work after the stay-at-home restrictions were lifted. He said the 16-week extension made no difference to his company, which employs 25 people in winter but will be paying up to 175 by the last week of the eight-week period this month.
“The PPP loan made it easy to get people back to work,” Palmer said. “But the pandemic delayed us three weeks on maintenance services and lawn cleanup. The new changes did give us a little more time, but we have already used the vast majority for payroll, so we think it will all be forgiven.”
The nonprofit Sun Valley Museum of Art received a PPP loan also from Zions Bank, which allowed the museum to retain staff and pivot many of its community programs online.
“The PPP loan provided us the resources to serve our community at a critical time,” said SVMOA Executive Director Christine Davis-Jeffers. “Our staff has exponentially increased our digital platform and served thousands through our online classrooms, podcasts and other resources.”
The Swiftsure Ranch equestrian rehabilitation nonprofit organization used a PPP loan from D.L. Evans Bank to rehire seven of its 11 staff members. Executive Director Paul Bennett said the new payroll forgiveness extension will allow the organization to pause long enough to assess additional rehires.
“Now we get a chance to recruit the right staff for the long term, not only by June 30,” Bennett said. “Now we can find the right people. In general, COVID has given us time to see where the organization wants to go in the future.”
As of Monday, that the ranch was at 25 percent of operational capacity, with the hope of building on that number by July with safety guidelines in place, Bennett said.
Groll at Zions Bank said Friday that the PPP loan forgiveness process is starting to open for borrowers this week.
“We don’t yet know everything about the process,” he said. “But we have been sending emails to our clients to have their documents for payroll, rent and utility expenses ready. We expect more direction by the end of June [from the federal government], but my guess is the process could be open until November, since there is a six-month period before the first loan payment is required.”
As of June 12, there was $129 billion left in the PPP program.
“The first round was crazy,” Groll said. “I thought the second round would not last a week. Now, a month later there is more than $100 billion left in the program. We think those who would have applied already have and the program has served its purpose.”
The last date for approval of a PPP loan is currently June 30. For the latest information on PPP loan forgiveness and other data on the program go to home.treasury.gov/policy-issues/cares/assistance-for-small-businesses.