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Emergency COVID-19 business loans kept paychecks going to 800,000 Utahns

While most of the businesses approved for help through the federal Paycheck Protection Program got less than $150,000, hundreds of Utah companies received multimillion-dollar packages.

The Westminster College in Salt Lake City is pictured on Tuesday, Feb. 18, 2020.
The Westminster College in Salt Lake City is pictured on Tuesday, Feb. 18, 2020.
Steve Griffin, Deseret News

SALT LAKE CITY — Newly disclosed data shows COVID-19 related emergency federal loans to Utah businesses has kept paychecks going out to almost 800,000 Utah employees.

And while most of the 50,000 or so loans that went to distressed Utah businesses were under $150,000, hundreds of companies received multimillion-dollar funding packages. Total funding to Utah companies as of June 30 was over $5.2 billion, according to a federal report.

The information released by the U.S. Small Business Administration provides the first detailed accounting of the 5 million-plus U.S. businesses that have been approved for potentially forgivable loans through the federally backed Paycheck Protection Program. The program launched in early April and was refunded later that month after initial backing ran out in less than two weeks. Last week, Congress approved an extension of the program until Aug. 8 and President Donald Trump signed the proposal over the weekend. About $132 billion of the $670 billion allotted for the program is still available to eligible businesses.

The data release comes after weeks of widespread criticism and calls to the Small Business Administration and U.S. Treasury Department to raise the bar on transparency for the taxpayer-backed program.

Utah Democratic Congressman Ben McAdams was among those calling for federal officials to pull back the veil on the process as a matter of public accountability. On Monday, McAdams lauded the information sharing.

“I’m glad the Treasury Department listened to my call for the release of Paycheck Protection Program loan data,” McAdams said “My concerns have always been that those who need and deserve these loans receive them and that taxpayers are able to see where their tax dollars are being spent during the COVID-19 economic response.

“Today’s list covers more than 70% of the loan amounts, which is a good start. Taxpayers deserve a full accounting for how we spend their tax dollars.”

Utah data sets included a list of 41 companies that received loans ranging from $5 million to $10 million, 240 companies that received $2 million to $5 million and 547 Utah companies that were approved for loans ranging from $1 million to $2 million. About 43,000 Utah companies received loans that were less than $150,000, and just under 6,000 companies qualified for emergency loans in the $150,000-$1 million range.

Stipulations for the Paycheck Protection Program limited access to for-profit and nonprofit businesses with fewer than 500 employees and for loan amounts up to 2.5 times the company’s monthly payroll expenses up to $10 million. As to business types, the scope of loan recipients was very wide ranging.

Utah enterprises approved for the top tier loan amounts of $5 million to $10 million included Westminster College, electronics accessories maker Zagg, Layton-based Tanner Memorial Clinic and Barney Trucking in Salina.

According to Small Business Administration data, the top five loan recipients in the U.S. by sector are:

  1. Health care/social assistance
  2. Professional, scientific and technical services
  3. Construction
  4. Manufacturing
  5. Accommodation and food services

Whether Paycheck Protection Program loans were distributed in a fair and equitable manner remains an unanswered question. Responding to demographic questions was optional for loan applicants and data reflecting gender, race/ethnicity and veteran status for Utah loan recipients was spotty and insufficient to form any equity assessments. In a statement, the Small Business Administration noted it was working to gather more of that information and the applications for loan forgiveness will require responses to demographic questions.

“Approximately 75% of all (Paycheck Protection Program) loans did not include any demographic information because that information was not provided by the borrowers,” the agency wrote in a document that accompanied the data release. “(The) SBA is working to collect more demographic information from borrowers to better understand which small businesses are benefiting from (Paycheck Protection Program) loans. The loan forgiveness application expressly requests demographic information for borrowers.”

The path to forgiveness for Paycheck Protection Loan recipients has been eased somewhat through changes to the program since its launch, including the extension of the window to spend the money as well as how it can be spent. While initially limited to eight weeks, Congress approved changes last month that should help more businesses earn loan forgiveness.

Those changes include granting businesses up to 24 weeks to spend loan money and allowing business owners to allocate 60% to payroll and up to 40% of the funding on other overhead expenses like utilities, rent, mortgage interest debt and other items. The original terms required borrowers to spend 75% of loan money on payroll to earn payback amnesty.

McAdams noted the original terms proved too stringent for many Utah businesses and particularly for those that received funding early in the pandemic when widespread restrictions were still in place.

“What I heard from many small businesses was they were struggling to spend the proceeds within eight weeks because they either weren’t open yet or were seeing lower customer demand,” McAdams said. “Many retail and restaurant loan clients received their funds in mid-April and their businesses weren’t even fully able to open by the eight week deadline.”

The Small Business Administration also noted that businesses listed in the released data sets have been approved for funding but not necessarily approved for loan forgiveness. The agency said it will also be reviewing all loans over $2 million.

“A small business or nonprofit organization that is listed in the publicly released data has been approved for a (Paycheck Protection Program) loan by a delegated lender,” the agency wrote. “However, the lender’s approval does not reflect a determination by (Small Business Administration) that the borrower is eligible for a (Paycheck Protection Program) loan or entitled to loan forgiveness. All (Paycheck Protection Program) loans are subject to SBA review and all loans over $2 million will automatically be reviewed.”