REGIONAL-The federal government funneled millions of dollars to hundreds of area businesses through its coronavirus-induced Paycheck Protection Program in recent months, all in an effort to keep hundreds of people working as the economy plummeted and consumer spending took a historic tumble during lockdowns and limited operations.
Fifteen businesses, 11 in Ely and four in Cook, received loans in excess of $150,000. Meanwhile, 235 businesses in Ely, Tower, Cook, and Orr got loans under $150,000.
While the Small Business Administration doesn’t disclose the exact amount of loans over $150,000, it does provide amounts for smaller ones while keeping the business names confidential. The SBA also reveals the number of jobs those loans protected, although the data for some lenders is incomplete.
In Ely, 132 businesses received $4.2 million in loans under $150,000, protecting an estimated 900 to 1,100 jobs. Twenty-six businesses in Tower received $807,000 to preserve 149 jobs. A total of $1.65 million went to 50 businesses in Cook to support 271 jobs, while 27 businesses in Orr received $867,000 to support 176 jobs.
But the PPP money was limited to only six weeks of support, and the clock has run out for most if not all of the forgivable loan recipients who must now go back to relying on their own business acumen in the midst of a fitful and uncertain recovery.
Performance
The Timberjay talked with two of the area’s leading PPP lenders to find out how the program worked and their thoughts about the prospects for businesses to continue on without the additional support.
In the rush to implement the CARES Act, the coronavirus relief bill that created the PPP, the process for applying loans was often confusing to lenders and borrowers alike.
Frandsen Bank and Trust in Ely financed the majority of loans in that community, and president Tom Omerza said they benefitted from being part of a larger banking system.
“Gearing up was easy because I had a corporate office that provided us with what we needed,” Omerza said. “The time-consuming part was getting what we needed from the applicants.”
American Bank is a system with nine branches, and the one in Cook financed the majority of loans in that area. CEO Ray Marwick, who lives on Lake Vermilion, said that they found the process a bit more challenging.
“All of our business bankers and credit analysts were basically working remotely from home,” Marwick said. “It was kind of a frantic rush. I think our bankers worked very well with customers in their time of need.”
Both executives believe the PPP accomplished its objectives for their borrowers.
“I think it’s been a big benefit for those businesses who didn’t have to lay off people,” Marwick said.
“The majority of businesses suffered from being totally closed,” Omerza said. “A lot of the astute ones realized they needed to keep their employees somehow. The overwhelming number of loans I did were under $150,00. I think everybody whether they got $2,000 or $20,000 were very appreciative.”
The CARES Act also provided $1,200 checks to millions of Americans and $600 in additional weekly unemployment benefits, but when all but essential businesses closed down and consumers didn’t have places to spend their money, much of it went into banks.
“I can tell you that deposits are up significantly in our bank and the whole banking industry,” Marwick said. “For a lot of folks, they couldn’t go anywhere, they couldn’t spend, and as a result they kind of sat on the funds.”
That’s become a boon for the business community as commerce has opened back up, and many businesses that survived with the aid of PPP loans are seeing better days, Marwick said, particularly in the retail and home improvement sectors.
“What we’re seeing with a lot of the businesses we work with across the Range is that they’re having record years,” Marwick said. “They have a tremendous amount of demand out there.”
Prospects
Now that the PPP support is gone, both bankers tempered cautious optimism with a dose of concern for the future.
“No one can predict an end to what’s going on here,” Omerza said. “There’s certainly concern out there. My corporate office is signaling there is trouble on the horizon. It’s hard to see because it’s the middle of tourist season. My take is that the restaurants are going to struggle after tourists go home.”
The best route to preserving local businesses through tough times is for people to keep their business local, Omerza said.
“We are way more than tourist-driven up here,” he said. “We need people using the hardware stores, the grocery stores. Businesses are the lifeblood of the community. Our local businesses in Ely make great donations to local entities. Shop local and support what’s here.”