The federal government is backing at least $215.8 million in loans into 2,306 Scott County businesses and nonprofits that pledge to retain 29,536 local jobs, according to The NSP analysis of Small Business Administration Payroll Protection Program data.
The PPP cash arriving in April, May and June was intended to keep payrolls as full as possible through the pandemic and some Scott County business owners say it’s working.
“When we applied for it, we were uncertain of what the next few months would look like,” said Dr. Abby Bowers, owner of Risius and Associates Veterinary Service in Eldridge. “Especially for us, the ag side of things wasn’t looking good,” she said.
Risius was among Scott County firms that got from $150,000 to $350,000, the lowest range among the list of disclosed businesses.
Roger Amhof said taxpayer-funded PPP support kept his 90-person staff intact through a sharp drop in shipping.
“We’re keeping a whole bunch of people paying income taxes and keeping stability in our industry. Had it not been for PPP, we probably would have been forced to lay people off. We’ve never laid anyone off that I can remember,” he said.
The Payroll Protection Program signed by President Trump March 27 and extended by Congress July 1 allows the Small Business Administration to back loans from private lenders. Those loans will be repaid by the government for businesses that deliver on the job retention promised in their loan agreements.
Bowers promised to retain 19 jobs. She told The NSP she’ll keep that promise.
“We were able to keep everybody on. For a while we did form two teams of staff to keep ourselves protected and went to 30-hour weeks,” she said. The aid allowed her to continue paying full-time wages. “In the end, we didn’t have to cut any staff hours,” she said.
She was among 350 First Central State Bank customers who shared about $25 million in aid obtained through the bank, First Central commercial loan banker Tom Messer said.
“About 90 percent of our loans were amounts below $150,000,” Messer said. “For the most part, I think businesses in Iowa have done quite well and probably have exceeded what we thought they would be doing. It worked better than we expected.”
Iowa Sen. Joni Ernst called PPP assistance, “a lifeline for Iowa.” She pledged support for a second round of benefits and is supporting a bill to force congressmen to disclose any benefits they received.
Aid to retain 29,539 jobs in Scott County
Scott County aid packages of $150,000-to-$10 million went to 387 firms and totaled at least $155.05 million. That money bought promises to retain 18,852 jobs.
Top Scott County recipients were ORA Orthopedics, Bettendorf, McCarthy-Bush Construction, and Palmer College, of Davenport. Each received $5 million to $10 million, according to Small Business Administration data that disclosed funding ranges, not exact allocations for top recipients.
Aid packages under $150,000 went to 1,919 firms and totaled $67 million. Those firms promised to retain 10,687 jobs.
Jobs retained for loans over $150,000 and under $150,000 totaled 29,539.
That includes North Scott Press, Inc., which received $123,200 to sustain operations and retain 15 employees at the company's three newspapers, the Eldridge North Scott Press, Wilton-Durant Advocate News, and West Liberty Index.
Because its loan is less than $150,000, its name is not disclosed in the SBA report, but publisher Bill Tubbs opted for disclosure. "It's the right thing to do," he said, when the newspaper is publishing others named in public records.
Tubbs said the impact of COVID-19 was noticed immediately the second week in March when businesses whose ads typically fill the paper were closed, and events were cancelled. "With help from PPP, we were able to retain a quality staff without layoffs or furloughs," he said.
The calculation of the amount, Tubbs said, was based on the average costs of payroll, employee benefits, rent and utilities. "Deductions were made for any employees making more than $100,000 a year, but we have none," Tubbs said.
58,346 businesses in Iowa
Statewide, PPP aid checks went to 58,346 businesses, with 90 percent getting $150,000 or less.
A Des Moines Register analysis of those receiving $150,000 or more identified 4,821 corn growers as the top category of recipients. The next most frequent recipient was restaurants, which received 1,732 loans. Religious organizations were next with 1,552 loans.
The NSP analysis showed PPP aid funded 115 nonprofits in Scott County. That includes three Catholic churches, Assumption High School, and the Diocese of Davenport, which together received between $1.75 million to $5 million.
Three Lutheran churches – Our Savior in Bettendorf, and St. Paul and Trinity in Davenport, received combined aid ranging from $650,000 to $1.7 million.
Sixty-eight percent, or 79 of the nonprofits got less than $150,000, a total of $2.9 million to retain 611 jobs.
Thirty-six other non profits won grants exceeding $150,000, totaling a range of $21.65 million to $49.65 million.
Recipients and lenders contacted by The NSP said the awards seem heavily influenced by lenders’ initiatives to customers. Bowers said her primary bank – a national chain with an Eldridge location – could not offer assistance in time for the first round. So she established an account with First Central State Bank, which helped her business win assistance in the $150,000 to $350,000 range when the program was extended.
“They worked with us, even though they weren’t our local bank. Maybe the second round would have worked out with our other bank, but we didn’t want to take that chance,” she said.
Amhof reported the same. Quad-City Bank and Trust processed his application before his representative at a Davenport-based national bank chain could respond.
“They were not prepared at all when it was first released. Quad-City Bank was excellent. A week later, the other banker said it was prepared to take apps,” Amhof said.
Fees won't cover bankers' costs
Lenders can earn government-paid fees of 5 percent for loans of $350,000 or less, which comprise the vast majority. Lender fees are 3 percent of loans of $350,000 to $4 million and 1 percent of those of $2 million or more, according to the SBA.
Local lenders contacted by The NSP, and others quoted elsewhere, say the fees will not cover their costs, but offset expenses they believe were essential to help clients.
The rapid implementation of the program left some lenders finding very different solutions.
Messer said First Central rallied staff just as the program began to work through a weekend and prepare applications for clients they believed would be eligible. That left the bank able to submit applications immediately.
DUTRAC Credit Union commercial loan officer Jeff Waller said his firm contracted with Kabbage, an online loan application service to provide PPP loans.
“We wanted to help as many business owners as we could. We knew going into it that we couldn’t service enough people, quickly enough. You never want to be in a position where you over promise and under deliver,” he said.
DUTRAC customers applied online through Kabbage.
Waller said he worked through his initial skepticism about the program.
“I was concerned initially that the volume of interest in the program would overwhelm the system in place. Initially, that happened. On the very first day, the SBA’s app portal crashed,” he said. “The growing pains largely got worked out, and the program evolved.”
Two dozen program changes
Now lenders are adapting to nearly two dozen program changes. “There are a bunch of interim rule changes. All address the gosh-we-hadn’t-thought-of-that details that came up,” Waller said.
Among those changes is a reduction in the amount businesses must spend on payroll. Initially, PPP required 75 percent. Since then, the minimum dropped to 60 percent for payroll.
Originally, the law granted two years for repayment. Now those who got loans after June 5 have five years, and earlier recipients can get extensions through their lenders.
Waller emphasized that early recipients must ask for extensions, and not assume they are automatically granted.
“Changes aren’t retroactive to all loans under the program. Any PPP on or before June 5 can be subject to original terms. If the borrower and lender who made or bought the loan agree to change the terms, they can modify them,” Waller said.
But neither lenders nor recipients are quite sure who will enforce these agreements.
How will it be enforced?
“Banks were a conduit for the government. It’s not up to banks to enforce or interpret the rules,” said First Central’s Messer. “The government already came out with a second one of those forms, and we’re highly expecting another forgiveness form to come out, which will probably be easier.”
But he can’t fathom how the SBA could examine every loan.
The SBA’s fiscal year 2019 report disclosed $143.5 million in business loans nationwide. That’s far less than the $215 million in PPP funds the SBA is now funding in Scott County alone.
On June 30, the SBA confirmed 4.8 million PPP loans totaling $521 billion nationally.
“Looking at it nationwide would be completely overwhelming,” Messer said. “How are they going to look at them all? They can’t. They’ve already said this probably will stretch out for years.”
Messer acknowledged the pandemic continues to hurt many businesses. But he’s heartened by results of his PPP clients. “They were able to maintain staff, even if staff couldn’t work,” Messer said. Without PPP assistance, he feared many more businesses would have been forced to lay off workers due to the threat of illness, customer declines and disruptions in supply chains.
“It’s been stress relief, actually,” said Risius veterinarian Bowers.
After surviving the initial uncertainty, she reports business is up. Her work with livestock “is picking back up. And small animals have been really busy.
“I think when people are home with their pets more, they’re noticing more things that they probably didn’t before,” she said.
And some customers are spending more on their pets. “Since people are not going out and doing as much, some have more disposable income,” she said.
Amhof said his ag equipment deliveries have picked up considerably, but he’s still waiting for aluminum wing production to resume at Arconic.
“Things are picking back up now again. Until two weeks ago, in order to keep our people, we had to supplement their income beyond what they were earning,” he said. Amhof guaranteed drivers minimum pay equivalent to 400 miles per day. He said normal wages cover 500-600 miles each day.
His goal was to keeping his staff intact. "We probably average $5,000-$6,000 for initial training for each employee. We don’t want to spend that twice if we don’t have to,” he said.