Some Utah companies that get PPP loans say they have no employees
More than 50,000 Utah businesses have taken advantage of Federal Paycheck Protection Program loans, an injection of cash to help cover employee wages and avoid layoffs during the pandemic-induced economic crisis .
So why did some of them tell the government that they didn’t have any employees?
Recordings released by the US Treasury Department show that 30 Utah companies have received millions of dollars in loans – despite listing on their demands that they had no workers to pay.
One of them was a Utah seed company that received between $ 1 million and $ 2 million, according to records. Another was a Draper-based debt collection agency. A building contractor helping to finish the interiors of houses has collected between 5 and 10 million dollars, the The Treasury registers indicate this.
The reason these companies reported few or no employees doesn’t seem to be bad: Company representatives attributed it to oversights and clerical errors. But it highlights the complicated and high-stakes process businesses had to go through as they sought the federal help they badly needed.
For example, a representative from Arctic Circle said that his company actually has around 800 employees in its offices and in its chain of hamburger and milkshake restaurants. However, he speculated that company representatives accidentally omitted this information from the lengthy application they had to complete to qualify for relief.
“This may be one of those fields that was not filled in correctly,” said Frank Christianson, the company’s chief financial officer, noting that Arctic Circle representatives were working with a bank to secure the ready.
While money was useful, said Christianson, it’s hard to say how many jobs the relief has saved. However, Arctic Circle was not forced to lay off any employees and was able to fill vacancies during the pandemic, even with a significant drop in activities towards the onset of the crisis.
A spokesperson for the Small Business Administration (SBA), which helped oversee loan distribution, said companies were not required to disclose how many people they employ, even though there are had space on the form for information. But eventually they will have to find that number.
“They will have to provide it to get forgiveness because they will have to show their lender how many employees they have and how much they paid them,” said Christopher Chavez, a spokesperson for the agency.
However, some of the discrepancies could be related to the federal government’s own record keeping, with one of the companies with no employees saying they never received a loan at all.
Chris Hatton, CEO of Danville Services Corp., said his company withdrew its application after learning it was not eligible. Still, Treasury Department data shows Danville Services, which runs day programs and provides residential services to people with disabilities, received between $ 5 million and $ 10 million.
“We are in desperate need of funds,” said Hatton, whose company employs more than 1,200 people in four states, including Utah. “It would have been a great relief. “
Because some of the company’s caretakers fell ill during the pandemic, Danville’s overtime costs increased dramatically, and Hatton said he had to bring in expensive contract nurses on several occasions. The temporary closure of the Danville day service centers also dealt a financial blow, he added.
But he said federal lending standards set a low income cap for his industry category, which covers businesses that serve people with disabilities. Because Danville Services generates annual revenue above the threshold, it was not eligible for a PPP loan, and Hatton said it had withdrawn its application.
Hatton says his company probably didn’t report any employees on their loan form due to issues in the application process. He explained that the PPP loan finder website kept crashing, so he had to complete the application over the phone with a financial advisor.
Laurel Day, owner of Roy-based Day Financial Services, said she got a PPP loan, but not the $ 1 million to $ 2 million reported by the Treasury Department. She said her company, which has two full-time employees, only received about $ 30,000.
“Not enough to help you for a while,” said Day, who started his business in the early 1970s.
Day said she was keeping her fingers crossed for the federal government to release another round of stimulus funding as the pandemic continues. A second wave of PPP small business loans is one of the items being negotiated.
To determine the correct loan amount, businesses were supposed to start with their total payroll for the 2019 calendar year and subtract any salaries over $ 100,000. With this number they calculated their average monthly payroll and multiplied this amount by the period covered by the PPP loans, according to SBA guidelines.
Companies had until August 8 to ask for help, the federal government agreeing to cancel the loan money that was used to make the payroll during the period covered.
Economists, business leaders and officials credited the massive stimulus package with supporting the economy as the country grappled with the onset of COVID-19, a public health crisis that has forced many companies to temporarily close their doors. This is despite the confusion and PR issues that surrounded the program in its early days, when many small businesses struggled to access federal assistance it was meant to be for them.
In mid-June, the Utah banks had granted nearly 50,000 loans worth approximately $ 5.5 billion in PPP financing, state officials reported. Over 70% of small businesses eligible for relief obtained it.