Local business owners feel fear and hope as a federal program runs out of money

Johnathan Thompson stands in the hallway of Northwest Dental Arts. (Amanda Loman/Salem Reporter)

Depending on the hour, Johnathan Thompson alternates between nervous and hopeful.

Following the outbreak of COVID-19, Thompson closed Northwest Dental Arts, a clinic he’s owned with his wife in Keizer since 2013. Still, he kept his staff of nine in hopes that a new federal program would help him make his payroll.

Last week, Thompson applied for the Payroll Protection Program through Columbia Bank. The program is part of the federal relief legislation that provides loans to employers that’ll be forgiven if they’re used to keep workers on the payroll.

Thompson said he asked for under $100,000 to help cover his payroll and received regular updates from his bank. But Thursday he was shocked when he received an email from his bank notifying him that the program had run out of money.

“It’s just a rollercoaster right now,” said Thompson.

The $349 billion Paycheck Protection Program was one of the key measures of the federal Coronavirus Aid, Relief and Economic Security Act. It essentially allowed employers to freeze their payrolls in place while the country rode out the COVID-19 outbreak.

With no money on hand, business owners like Thompson now face uncertain prospects. Thompson said that he has other lines of credit he can tap but would prefer the Paycheck Protection Program because the loan is forgivable. Now, he and other business owners must wait to see if Congress will direct more money to the program.

Since the program launched on Friday, April 3, the U.S. Small Business Administration, which oversees it, processed 14 years’ worth of loans in 14 days.

According to data released by the Small Business Administration on Monday, over a million loans worth over $247 billion had been approved. Those included 9,508 in Oregon for $2.4 billion.

Sharon McKee, art director and owner of In House Graphics who also owns McKee Farms near Amity, successfully applied for an SBA Paycheck Protection loans for both businesses. (Ron Cooper/Salem Reporter)

Sharon McKee was one who made it through before the federal till was emptied.

On Wednesday, just as the program was preparing to shut, she received an email from Ready Capital, a New York-based lender, that she qualified for loans for her two businesses.

She said she was approved for $77,000 for In House Graphics, her Salem-based graphics design company. The company has accounts with state agencies that she said are putting work on hold. She also has 15 employees at her farm in Amity that grows grass seed and hazelnuts on 1,600 acres. She wouldn’t say how much she was approved for the farm.

While she hasn’t seen the money yet, she remains hopeful and described the prospects of keeping employees on the payroll as “wonderful.” With the first of the month coming up, she said her employees are hopeful too.

“I’m an optimist, and I’ve said, ‘we’ve done everything correctly and if anybody should get it, we should get it,’” she said.

Danielle Bethell, the executive director of the Keizer Chamber of Commerce, said that many businesses have been confused about the program’s requirements and her organization has been fielding calls to help. She said that many of her members have gotten crickets about the status of their application. She also said information from the SBA has been unclear.

“What does it mean?” she said. “There is no information for us to really hang our hats on.”

She said that some businesses assumed the money from the program would come in. Now, they find themselves overextended.

Marcy Lantz, a CPA and partner at Aldrich CPAs + Advisors LLP, said that a common problem was the shifting guidance from the SBA to businesses on how they should calculate payroll costs and that not all banks had the same process for approval. She said that businesses that got their applications in early had a better shot at the first-come, first-serve program.

There were concerns early on that the program would run out of money. Now eyes have turned to Congress to see if lawmakers will approve more money.

In a notice sent to customers, US Bank said it was optimistic that Congress would do so. In a statement on its website, Oregon-based Umpqua Bank said it was similarly optimistic and would continue processing applications. However, it noted the “timing is unknown.”

A spokeswoman for Congressman Kurt Schrader, a Democrat who represents the Salem area, said in an email that the congressman has “serious frustrations and concerns with SBAs handling but also understands the massive undertaking that this is.”

Schrader sent a letter on Wednesday to the SBA raising concerns about businesses in Oregon being able to access a different source of relief: Economic Injury Disaster Loans. The loans are part of an existing program that has been touted as another resource for businesses to stay open. On Wednesday, the SBA announced that it had run out of money for that program as well.

Thompson said he was approved for an Economic Injury Disaster Loan. But he said it can’t be used for payroll and isn’t forgivable but can be used for things like lab expenses.

He said his bank told him that it would continue processing his application in hopes that Congress authorizes more money. Until then, he’ll be waiting.

“I hope Congress gets their act together sooner rather than later,” he said.