Early rush for small business relief lowered demand in Montana as funds ran out

There are Montana businesses socked by the pandemic who are waiting on help from the now-exhausted Paycheck Protection Program, but the demand is thinning after a crush of early borrowing.

There’s a need for more than $100 million in loans to help Montana businesses keep workers on payroll, said Cary Hegreberg, Montana Bankers Association CEO. That estimate of remaining demand is a fraction compared to the $1.47 billion awarded to Montana businesses in the past two weeks.

“These community banks, they stepped up,” Hegreberg said. “They reassigned people. The quickly retrained people, who aren’t typically commercial lenders, to process applications and get them submitted. Later, you’re going to be seeing your customers at the Rotary Club and the Chamber of Commerce lunch and at church. You want to be able to look them in the eye and know you did everything you possibly could to help them.”

Banks are now trying to determine how long Montana businesses can remain on lockdown without shutting down for good.

The Montana office of the Small Business Administration reported Friday that 13,456 businesses had been awarded loans. However, some businesses had only been able to apply for the past seven days, namely independent contractors and bars and restaurants with on-site gambling. Montana has about 121,000 small businesses, SBA estimates. Some in Congress want the program made available to more businesses before a vote to refill PPP with another $200 billion. The loans cover payroll for businesses with 500 or fewer employees. The money doesn’t have to be repaid if 75% of the borrowed amount goes to salaries. The other 25% can be spent on utility bills, leases or mortgage payments.

At Yellowstone Bank, President Jay Harris said more than 500 businesses had qualified for loans before SBA declared the Payroll Protection Program depleted earlier this week.

“You heard this was coming. You knew it was going to run out,” Harris said. “We are hustling to get all our applicants who applied, to get them processed. We may have missed one or two, but frankly I haven’t heard of many we missed. We were able to get more than 500 into the system and processed, and almost 450 of them already have their money.”

Both Harris and Hegreberg were confident Congress would approve more money for PPP. Banks are working with customers to have applications ready when PPP funding is restored.

Like the three pandemic bills before it, the legislation to add $200 billion to the Paycheck Protection Program has come with partisan debate over what else the bill needs to address. The overall cost of PPP as well as add-ons to the proposal have the size of the bill on track to more than double.

House Democrats want $100 billion added to the bill for hospitals. Another $150 billion is sought for local governments. The funding needs of both have been on display in Montana during the past week. The City of Billings has furloughed two dozen workers in the past couple of weeks.

The Montana Hospital Association estimated conservatively that its 88 members had lost $100 million to the pandemic as elective surgeries and other services have been cut back because of the pandemic.

Republicans this week blamed Democrats for the not approving more PPP money on its own and dealing with the other issues separately. Sen. Steve Daines, in a tele-townhall on Friday, said Democrats were holding up the vote on resupplying the Paycheck Protection Program.

“We’ve run out of money in that fund. It’s moved very, very quickly and I’m very disappointed that Chuck Schumer and Nancy Pelosi are continuing to block funding that,” Daines said. “We could have put more money into that account a week ago, but they are stopping us. We now have Democrats saying, ‘it is time to stop playing politics, let’s just refund that.’ I say reload the fund for this Paycheck Protection Program.”

Tester said in a Friday email that hospitals do need to be taken care of in the bill. There’s also a need to expand the PPP so business owners in Montana’s outdoor economy, many of whom have seasonal employees, also qualify for the PPP, he said.

“I’m working with my colleagues on both sides of the aisle to get more resources to our small businesses through the Paycheck Protection Program, fix eligibility issues so more Montana small businesses can actually use it, and get more resources to our brave nurses and doctors for the protective equipment they need to treat sick patients,” Tester said. “We’ve got to slow the spread of the virus while supporting small businesses as we combat this public health crisis — that’s what Montanans expect and we’ve got to get it done.”

Nationally, the Paycheck Protection Program has issued $342 billion to 1.6 million businesses since April 7.