Another federal business rescue package OK’d; some Vt. businesses seek changes

Vermont business leaders are hoping to see an array of changes to the federal business relief bills that have arisen out of the COVID-19 pandemic that closed non-essential businesses in March.
The U.S. House of Representatives passed a $484 billion package Thursday that replenishes the Small Business Administration’s Paycheck Protection Program, or PPP, and Economic Injury Disaster Loan, or EIDL. The measure also clarifies that small farms and agricultural operations are eligible to apply for the economic injury disaster loans, allocates $25 billion in federal funding for COVID-19 testing and adds support for hospitals.
The PPP and EIDL ran out of money April 16 after just two weeks, before many businesses had had a chance to receive loans. The more than $300 billion that Congress approved April 23 will help more businesses use the popular program, said Rep. Peter Welch, D-Vt. About 6,000 Vermont businesses received $1 billion from the first round of PPP and EIDL funding, putting the state third in the nation per capita for use of the programs.
The two business programs are pretty much the only federal option for businesses struggling to stay afloat in the wake of stay-at-home orders prompted by the COVID-19 pandemic.
“The good news is $1 billion is coming into the Vermont economy,” said Joan Goldstein, Vermont’s commissioner of economic development. Goldstein said banks and credit unions worked overtime helping business owners with their applications for a brand new program. SBA lenders are still trying to clarify some of the guidelines.
“We’re very grateful to the congressional delegation for all the work they did,” Goldstein said.
Sen. Patrick Leahy, D-Vt., who was a lead negotiator on the proposal, called the measure a “coronavirus aid package 3.5” and added in a statement that there is more to be done.
“I am glad Congress was able to reach bipartisan agreement on an interim bill to help small businesses that have been devastated by this crisis, and to provide aid to hospitals and improve testing capability for COVID-19,” Leahy said.
“I look forward to working on a fourth, comprehensive, coronavirus relief bill in the coming weeks to address these needs,” Leahy said.
Like most of the people working with the PPP and EIDL programs, Chris D’Elia, president of the Vermont Bankers Association, said he thinks more rounds of funding will be needed.
“The reality is, it’s the next round, and we will again work through that next round of funding, but it remains to be seen how many businesses are going to be successful in getting their loans approved,” D’Elia said. The SBA loans are handled by bankers or by lenders like the Vermont Economic Development Authority, or VEDA, and D’Elia’s members have been working overtime to process the loans remotely on a required 10-day time frame.
D’Elia wants the U.S. Treasury to lengthen the time available for lenders to process the loans. The Treasury has that discretion even after the measure has become law, he said.
The other major change that lenders and businesses want to see is the criteria for the PPP to be converted from a loan to a grant. Right now, that conversion is based on the number of employees a business has at any given time — and on how many it will rehire within the next two months. That makes things difficult for borrowers like Bolton Valley Resort, which was approved for a $775,000 loan through VEDA.
Bolton President Lindsay DesLauriers said she was amazed how quickly the lending program fell into place. But she added it might not be the right option for Bolton Valley, which closed March 15, almost a month ahead of expectations, putting nearly 350 people out of work. She doesn’t expect the state to allow hospitality businesses to open anytime soon. To qualify for loan forgiveness, the employer must hire the same number of people that were employed at the business last year.
“Our hotel is not allowed to open, and we can only bring back to work teams of two as of Monday, who are working outside and in otherwise unoccupied buildings,” DesLauriers noted. “As a seasonal business, we have a smaller workforce at this time of year, and we’re also constrained by the governor’s order so we can’t hire people back. Yet they have an eight-week time frame; the clock starts ticking on the day you close on your loan. Unless they change the forgiveability calculation, a majority of our award will actually remain as debt.”
Andrew Schain, co-owner of the Public House restaurant and Public House Diner in Quechee, said he received a PPP grant but he doesn’t know if he’ll use it, because he has limited his staff of 30 people to just two, and is only offering take-out for the foreseeable future. He has mixed feelings about hiring more people back, he said, because he wants to limit the spread of COVID-19. And he said it’s difficult to convince workers to return because they are making more on unemployment than they would working for him.
“What good is it going to do me to take out the loan to then pay people to not work?” Schain said, adding, “my dishwasher is taking home something like $900 a week.”
Meanwhile, Vermont banks and credit unions have piles of applications that came in after the money ran out, and will start processing them as soon as the bill becomes law.
On Thursday, D’Elia said he hadn’t gotten any information about lengthening the processing time frame, or about other details — such as the criteria for loan forgiveness — that bankers want to see changed.
“It’s very frustrating, unfortunately,” D’Elia said. “This is the system we have to work with right now, and we’ll do our best and hope the guidance comes out sooner rather than later.”
Goldstein urged business owners to apply for the new round as soon as possible. The Agency of Commerce and Community Development is holding a town hall meeting Friday for business owners about the SBA loan programs.
“It’s highly competitive; you’ve got the whole country going after this,” Goldstein said. “But it’s not going to be enough, just because there is so much need.”
If you don’t have a relationship with a lender, establish one now, added D’Elia.
“Don’t sit on the sidelines,” he said. “Get your application together.”

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