Small Idaho firms feared they would lose out on coronavirus funds. Here’s what happened
It’s the second time around for Idaho businesses seeking federal cash to keep paying their workers amid the coronavirus pandemic. The first time was rough: Money ran out in 14 days. Will the second time be better?
According to an Idaho credit union and a state banking representative, the answer is yes.
There have been a few hiccups in submitting applications for the second round, which opened for applications Monday. Loans are being approved in large numbers, Idaho bank and credit union representatives say.
The Paycheck Protection Program provides money to businesses to retain workers and bring back those laid off because of a drop in sales at stores and restaurants. If at least 75% of the proceeds are used for payroll expenses and the rest used for certain other business expenses, the loans are forgiven.
The businesses get to keep the money, up to 2-1/2 times their monthly payroll costs. Self-employed people such as contractors and gig-economy workers can apply too.
The first round of $349 billion, part of the $2 trillion coronavirus relief bill Congress passed in March, opened for applications April 3 and ran out of money by April 13. In the first round, 13,627 Idaho businesses obtained loans.
But thousands of other small businesses in Idaho and other states were left unfunded and anxious for their survival and their ability to keep employees.
President Donald Trump on Friday signed a supplemental $484 billion COVID-19 relief bill that included $310 billion for the PPP program. Lenders saw the supplemental bill coming, and they were ready.
“There have been glitches and outages due to the high volumes, but we have been able to secure funds for over 1,500 businesses since the funding has been re-opened,” Laura Smith, director of public relations for Idaho Central Credit Union, said in an email Wednesday.
The demand was so great Monday that the Small Business Administration portal, E-Tran, crashed, Fortune magazine reported.
The loans processed by Idaho Central Credit Union since Monday match its number from the first round of PPP loans, Smith said. The credit union secured $116 million in funding in that round.
There were concerns that large banks, which serve many large businesses, might gobble up the bulk of the funding, leaving smaller banks and businesses in the lurch. So Congress set aside $30 billion of the total for lenders with less than $10 billion in assets, Smith said.
“This allows institutions like us to process applications for their customers without having to worry about the big banks taking all the funds,” Smith said.
Melanie Norton, spokeswoman for the SBA, said nearly 70% of the 331,000 loans approved as of Tuesday, April 28 — valued at $30 billion — were from small lenders with less than $10 billion in assets.
“So far, 77% of loan volume has been processed by small and medium lenders,” she said by email.
The $30 billion has already been used up, but loans from small lenders continue to be approved under the rest of the latest appropriation, she said.
Trent Wright, CEO of the Idaho Bankers Association, said community banks in Idaho are reporting good approval rates on their PPP loan applications.
“Please know that large banks do not have more success than the smallest of lenders,” he said by email.
Idaho banks obtained $1.85 billion in PPP funding for 13,627 Idaho businesses in the first round, he said.
“Banks in Idaho have been assisting their customers aggressively since families and small businesses were first impacted by the coronavirus,” Wright said.
