Montana businesses have received more than $1.75 billion in mostly no-payback federal loans from the Paycheck Protection Program, according to figures released this week.
The U.S. Small Business Administration reported Monday that 22,583 loans had been issued to Montana businesses. The program is by far the largest source of small business assistance offered by the federal government in response to the COVID-19 pandemic. By comparison, the state government received $1.25 billion to cover COVID-19 expenses, including expenses of local governments.
“Montana certainly took advantage of that program,” said Brent Donnelly, Montana district director of the U.S. Small Business Administration. “As of right now, lenders can still get an SBA loan number up until June 30. We have about another week left. If there’s a business out there that hasn’t applied, for whatever reason, the time to do it is now.”
Donnelly said that in addition to PPP, Montanans received nearly $380 million in Economic Injury Disaster Loans, which are government backed 30-year business loans at 3.75% interest. Those loans come with an emergency grant of $10,000. Montana businesses received $45 million in grants.
PPP offers federal backed loans to cover up to eight weeks of business payroll and related overhead, money that initially didn’t have to be repaid if at least 75% of the borrowed amount went to payroll. The remaining 25% had to be committed to expenses like utility costs, lease and mortgage payments. The interest rate on anything that was repaid is 0.5%.
Lending officers at most banks and credit unions handled the paperwork for businesses. Initially, PPP ran out money in a matter of weeks, but funding was increased and the loan terms were broadened to make the loans available to more people. The time period for using the loans went from eight weeks to 24. The time to repay any owed amount was extended from one year to five.
Tuesday, Montana’s U.S. Sens. Steve Daines and Jon Tester were eyeing ways to either extend the life of PPP, or roll out new lending services to address the continuing economic challenges of COVID-19.
“The Paycheck Protection Program was always intended to be a bridge to get folks through the initial shock of this crisis, and by and large it was successful,” Tester said in an email. “But now, we need programs that are more targeted and provide more flexibility for the main street businesses that have been hit hardest by the lasting effects of the pandemic.”
The next response to the small business challenges would likely provide liquidity to small and mid-sized businesses to help them relaunch after the economic shutdown. Tester supports loan forgiveness being part of the that plan. The focus of the loan would be businesses that took substantial revenue hit during the pandemic-caused recession.
Daines is working on a bipartisan bill with Sen. Cory Booker, D-New Jersey, which would create a small business relief fund that would be offered in addition to PPP, not as a replacement, said Katie Schoettler, Daines’ communications director. Small businesses with fewer than 20 employees and, in low-income areas, businesses with up to 50 employees would qualify. The funding, up to $50 billion total, would be offered at the local level as grants or loans.