SALT LAKE CITY — The state of Utah appears to be ahead of its federal counterparts in getting money to local businesses suffering under the widespread and ongoing economic fallout of the COVID-19 pandemic.
The Utah Governor’s Office of Economic Development announced Wednesday that it will begin to distribute some $6 million in various amounts to around 500 Utah small businesses later this week following the completion of the first portion of a state emergency loan program aiming to help distressed local businesses.
A second edition of the program is set to launch next week and will award an additional $5 million in emergency funding. Unlike the first version, Utah nonprofit businesses will also be eligible to apply.
Last week saw the launch of the Utah Leads Together Small Business Bridge Loan program, an effort aiming to help Utah businesses with 50 or fewer employees with 0% interest loans from $5,000 to $20,000 for up to a 60-month period. The bridge loan amounts are limited to no more than three months of the applicant’s demonstrated operating expenses, and successful awardees can defer the start of loan repayment for up to 12 months.
Over 2,700 Utah businesses submitted at least some part of their applications by last Friday’s deadline, but Governor’s Office of Economic Development Executive Director Val Hale told the Deseret News only about 1,000 of the applicants completed the process in time for consideration.
Those applications, Hale said, were assessed and ranked by a panel of 25 that includes a mix of industry experts, private sector representatives and state officials.
Hale said he was amazed by how quickly state staffers were able to construct and deploy the program with funds set to go out just over a week after the program was announced by Gov. Gary Herbert. It appears the state funding is being disbursed ahead of federal stimulus program money that has also been earmarked to assist struggling U.S. small businesses.
“I have to compliment our staff on how quickly they have moved on this,” Hale said. “We’ve had a few hiccups but a lot less than than we anticipated.
“People sometimes say that government moves slowly, but our team moved at lightning speed on this.”
Hale said initial plans had the bridge loan fund backed by $8.5 million in state money but since its announcement, leaders have decided to divert about $11 million in expected federal COVID-19 assistance to the loan program.
Hale noted that while only about half of the applicants who completed the process were awarded money in the first round, those businesses that were unsuccessful but that had submitted completed applications will automatically be considered for round two funding. Details on that process will be available soon on the loan website. Hale also noted about 27% of those businesses getting awards are based in rural Utah counties.
Businesses granted funding in this round will be notified via email on Wednesday, Hale said, and those notices will include directions on how to digitally sign loan agreement documents. Business owners who complete that task quickly will have checks going out to them by the end of the week, according to Hale.
Further information on the bridge loan program is available at coronavirus.utah.gov.
On Wednesday afternoon, Sen. Mitt Romney tweeted, “As of last night, 3,489 Utah employers have received $718,878,690 through the #PaycheckProtectionProgram —forgivable loans to ease the burdens of #COVID19. As the Senate continues work on further relief measures, I will keep pushing for additional support for our small businesses.”
As of last night, 3,489 Utah employers have received $718,878,690 through the #PaycheckProtectionProgram—forgivable loans to ease the burdens of #COVID19. As the Senate continues work on further relief measures, I will keep pushing for additional support for our small businesses.— Senator Mitt Romney (@SenatorRomney) April 8, 2020
Siobhan Carlile, from the Utah office of the U.S. Small Business Administration, reported on a Silicon Slopes Town Hall webinar Wednesday that the latest numbers her office has received showed the Paycheck Protection Program had funded, nationally, about 400,000 loan applications representing over $100 billion.
On the same call, Utah tech leaders expressed concerns about Utah businesses failing to get a proportional share of those federal stimulus dollars, garnering only about 7/10 of 1% of the Paycheck Protection funding that’s been allocated so far.
The $350 billion Paycheck Protection Program, part of the $2 trillion federal stimulus package, is providing federally guaranteed loans to eligible small businesses in amounts up to $10 million and may be partially forgivable. The available financing can provide businesses that employ 500 or fewer with funds equal to 2.5 times the company’s average monthly payroll expenses. These loans are intended to help small businesses retain employees throughout and after the COVID-19 crisis with fund dispersal from the program happening on a first come, first served basis.
While the loans are guaranteed with federal funding, loans are originated and administered by local lenders throughout the country.
The Paycheck Protection effort launched last Friday and has been beset with early problems, both with the local banks charged with originating the loans and technical issues on the SBA side of the process. Some banks have opted out of participating in the program, others ran out of capital in just the first few days of processing applications, and others have simply struggled with processing an enormous volume of applications.
Federal leaders expect the initial funding to be quickly consumed and discussions to funnel additional money, potentially hundreds of billions more, toward small businesses assistance was active among congressional members on Wednesday.