Billings Gazette: Tester addresses paycheck protection loans during press call

by Tom Lutey

Amassive federal effort to keep small business employees on payroll is 1 week old Friday and already in need of more money and a hard look at how it’s working.

U.S. Sen. Jon Tester said in a Thursday press call that he’s visiting with Montana small businesses now about how the $349 billion Paycheck Protection Program is performing. In the first five days of the program’s rollout roughly $500 million was issued to 5,000 Montana small businesses. Businesses who spend 75% of the money on payroll don’t have to repay the loans.

Tester is the second most senior Democrat on the Senate Banking Committee, behind Sen. Sherrod Brown, D-OH.

There have been struggles. Early interest in the program crashed U.S. Small Business Administration website links to Paycheck Protection Program services. While many banks rushed to get applications processed starting at midnight opening day, others sat back waiting for SBA to give specific instructions which small businesses qualified.

Some banks told Lee Montana Newspapers last week that they were told by SBA and the U.S. Treasury to get applications started and the federal government would finalize lending rules later. The urgency stemmed from the sharp downturn in the U.S. economy, as states ordered non-essential businesses closed and for people to stay home. More than 6 million Americans have filed for unemployment in the past few weeks. But that wasn’t assurance enough for everyone, including some of the nation’s largest banks, which held out for more information.

“I’m in the process of gathering information from small businesses around the state right now, to find out how the application process is working for them, now that we’ve the crash of the system and they’ve reinstated it and we’ve got some banks working with it I think successfully, others that are having a hard time with it, so we can figure out where those tweaks need to happen once we get back into the Banking Committee,” Tester said.

Montana Bankers Association CEO Cary Hegreberg said Wednesday that his members embraced the program and were working long hours to get Montana Small Business claims submitted. He credited SBA Montana District office for taking questions from the banks late into the night to get loan applications processed.

Montana banks offer details on what financial assistance is available for businesses during pandemic
Montana banks offer details on what financial assistance is available for businesses during pandemic
Tom Lutey
All payments on the loans are forgiven as long as 75% of the money is used to keep employees on the payroll. The other 25% of the loan may be used for expenses like rent, mortgage interest and utility bills. Anything the money was spent on outside those parameters would have to be paid back at 0.5%.

SBA Montana Director Brent Donnelly said Montana has roughly 121,000 small business. The several thousand applications already processed is just the start. Friday, the program opens up to independent contractors and sole proprietors.

There’s been an urgency for businesses to apply because the $349 billion is being is being distributed on a first-come, first-served basis, with states receiving a designated share. Wednesday, the SBA stopped disclosing state-level information about where small businesses receiving loans were located. By Thursday, nearly 500,000 PPP loans worth more than $130 billion had been issued nationwide through 4,000 banks according to SBA.

Tester said the SBA pulling back on state-level information about the loans raised concerns about the transparency needed to determine whether the PPP was being distributed fairly.

“We deserve to know that information. And if Montana is getting more, we deserve to know that information. That’s just transparency on how money is spent. When that information is hidden, it makes people like me say, ‘Well, what are you hiding?'” Tester said. “‘Why did you change this? Why isn’t as transparent as it needs to be?'”

Thursday, the U.S. Senate attempted to approve another $200 billion for PPP, but failed as Democrats attempted to broaden the scope of the aid package. The extra PPP funding needed unanimous consent to pass without lawmakers present. Democrats voted no. Republican Majority Leader Mitch McConnell blasted Democrats afterward.

“Sen. McConnell’s proposal did not address the immediate needs of small businesses, nor did it provide funding for our hospitals or local governments that desperately need it. Instead of trying to solve the public health crisis to get Montanans back to work faster, Leader McConnell drew a partisan line in the sand,” Tester said in follow up email after the press conference. “Two weeks ago, the Senate showed we could come together to actually get something done when we passed a law to combat the coronavirus with the support of every senator and President Trump, and I’m confident we can do it again.”

In the House, Democratic Speaker Nancy Pelosi said the McConnell proposal wouldn’t receive unanimous consent in her chamber.

U.S. Greg Gianforte, R-Montana, chided Democrats Thursday in a press release for delaying the $200 billion.

“Outrageous. Nancy Pelosi, Chuck Schumer, and Senate Democrats are delaying the expansion of a bipartisan program to help small businesses and workers – a program they all voted for in late March. Their partisan obstruction is just outrageous. Folks are hurting. I hear it from Montana workers and small business owners I talk to everyday,” Gianforte said.

More than 60,000 Montanans have filed for unemployment.