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

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Thirsty Street Brewing Company

Maddy Ostwalt washes two crowlers before serving a customer at Thirsty Street Brewing Company in Billings on March 19. Thirsty Street is serving to-go bottles and crowlers while restaurants and bars are closed in Yellowstone County due to the spread of coronavirus.

After calming panicked borrowers for the past two weeks of a statewide business shutdown, Montana banks were eager to hear the U.S. Small Business Administration lay out details about the $2.2 trillion coronavirus rescue package.

Lenders had fielded calls from owners of restaurants, hotels and bars. They’d heard from the nonprofits forced to cancel fundraising events. Anybody with a canceled concert or a film festival on hold was in dire straits. Main Street Montana is looking for a life line.

If there was a Montana lender who skipped the Tuesday afternoon conference call with SBA, Western Security Bank Division President Mike Seppala didn’t know who it was.

“When I got on the call, there were 330 people. That’s almost every banker in the whole state,” Seppala said, who oversees six Glacier Western Security offices in Billings.

Lee Montana Newspapers visited with Seppala, as well as Stockman Bank Market President Wayne Nelson and SBA’s Montana director Brent Donnelly, about what borrowers needed to know about federal financial aid programs rolling out counter the economic challenges of the pandemic.

The three also offered advice on how distressed borrowers should respond to Montana’s suspension of foreclosures and collections on overdue loans.

Are banks open for walk-in business right now?

“Everybody is working, we just have restricted access to our lobbies," Seppala said. "If you call for an appointment, we’ll make an appointment, either over the phone or even in person. We’re going to ask you if you’re healthy, but that’s where we’re at right now. We’ve got everybody coming to work that’s not sick. We can do a lot of it over the internet, too. That’s not a problem”

There’s a lot of interest in what the SBA and U.S. Treasury are rolling out, but the details are just coming in, Nelson said. Information links circulating Monday for SBA programs were quickly overloaded by interest across the country. The SBA website consequently crashed, but Wednesday those links were working better.

Nelson said much of the communication between borrowers and Stockman Bank can be done online. A phone call will get things started.

Most big banks have information to the COVID-19 pandemic on their websites. For more information on their procedures and availability, visit your bank's website.

Banks will be the front counter for dealing with businesses and other borrowers looking the tap into federal programs. SBA put out some early guidance late Tuesday, and more information is expected Friday and Monday. What information do people need to be gathering up now to present to lenders?

“We’ve got a checklist, a short little punch list that we can provide to people," Nelson said. "You don’t have to bring a whole lot. The SBA and the Treasury Department are trying to make this very streamlined, for obvious reasons. The driver of this on the Payroll Protection Program is your average monthly payroll cost. What people can do right now is gather 2019 payroll costs. And you can include in that, health insurance, 401(k) contributions, PTO, payroll taxes that were paid. And that’s going to come up to a gross number. It’s that simple. Give me the source documents. It could be QuickBooks, some other spreadsheets that you provide to the bank, where you certify those are your payroll costs.”

Seppala added that because tax filing deadlines have been extended four months from April 15 to July 15, business that have 2018 information available but nothing yet for 2019 should bring in the 2018 information.

The Paycheck Protection Program is a newly created, $349 billion program intended to help businesses retain employees, rather than send them to the unemployment line, according to SBA. Banks will be the single point of contact for everything from applying for PPP to receiving funds to meet payroll. Businesses can receive federal loans to cover up to eight weeks of payroll and related overhead. The goal is to have the program running by Saturday, April 4. The funds are supposed be available the same day a business is approved for the loan. And, the loans will be forgiven as long as the money is used to keep employees on payroll and for other expenses like rent, mortgage interest and utility bills.

There are no requirements of collateral or personal guarantees. There’s not loan repayment required as long as Payroll Protection Program funds are used to pay for the qualifying costs. Money that’s spent on non-specified costs will have to be paid back over two years, starting six months after the loan was issued. The interest rate for payback is .5%.

Keeping workers on payroll is the key to not having to repay the loan. No more than 25% of the forgiven loan amount can be for non-payroll costs.

Donnelly said his SBA Montana office has received hundreds of calls from businesses looking for payroll help. Specific information about the program is available online.

Important for businesses that have already laid off workers, the Paycheck Protection Program is available retroactively to Feb. 15. Workers can be rehired through June 30.

Who qualifies for the Payroll Protection Program? Is it just for for-profit businesses?

All businesses, including nonprofit groups, veterans’ organizations, tribal concerns, sole proprietorships and self-employed people all qualify, as do independent contractors. Businesses with 500 or fewer workers qualify, with some exceptions for certain industries that have specific limits set by SBA. The maximum loan is $10 million.

What’s available now for the non-payroll expenses? What’s out there for a business that’s seen its market disappear because of travel restrictions or forced closures, like someone in the tourism industry?

The Economic Injury Disaster Loan is available now, Seppala said. It works better for non-payroll expenses. “The Economic Injury Disaster Loan is a loan that small businesses can apply for. If you are successful applying for that loan, you will be sent a check for $10,000 within three days from the SBA,” Seppala said. “It will get people $10,000 pretty quickly if the qualify for that loan.”

The interest rate for the EIDL loan is 3.75%.

“The EIDL is for working capital specifically and in the application is the SBA definition of working capital. Payroll is part of the worked capital definition. However, if you put payroll into your EIDL loan application and you take that loan, you can’t do the same thing with the Paycheck Protection Plan. You can’t double dip,” Seppala said.

The Payroll Protection Program is going to offer considerably more payroll help than the EIDL.

Repayment is deferred one year on Economic Injury Disaster Loans related to the pandemic. Previous EIDL loans are also deferred for a year.

Is there more than $10,000 in assistance available through EIDL? This is the kind of loan a business might get after its economy was wiped out for several months by a natural disaster, right?

Yes. Nelson said he’s working with a grocer on the border of Yellowstone National Park who has seen its extremely seasonal opportunity to turn a profit evaporate as the park is now closed.

SBA offers up to $2 million in assistance per small business through EIDL. The money can be used for paying accounts payable or fixed debts, as well as payroll. The loan is supposed to cover bills that can’t be paid because of the pandemic’s impact.

While the interest rate for for-profit businesses is 3.75%, nonprofits receive an interest rate of 2.75%. Borrowers have up to 30 years to pay the loans back.

“They’ve opened it up to nonprofits," Nelson said. "I was working with one yesterday, and they needed money now. They had some events that were canceled and those were their fundraisers. And so, they got on the EIDL page got 10 grand that will be deposited Friday in their checking account. The zoo is looking at this. They had to cancel their Wild Affair. How about MSU Billings? They had to cancel the wine fest. Those are big money-makers for those entities.”

There have also been steps taken to help borrowers with payments due on existing loans, right? The SBA is going to make loan payments for borrowers on existing Small Business Administration loans for up to six months, right? Tuesday, Montana Gov. Steve Bullock announced that foreclosures and evictions were suspended and that late fees couldn’t be charged. The governor’s order lasts though at least April 10. How important is it the people who are able to make payments on mortgages and other loans still contact lenders to explain why payments aren’t coming?

“With the SBA program (for existing loans) there is some forgiveness," Nelson said. "That’s a little bit different; that’s almost like grant money. But the deferments we’re talking about, loans with your mortgage company, your business loans with the bank, your obligation is not forgiven. It's just deferred. If you communicate with your landlord, or your bank or your vendors, that two-way dialogue, that gets you lots of places. That means a lot in the business world to have open, good communications so that you can work jointly to solve the financial problem in front of you.”

After calming panicked borrowers for the past two weeks of a statewide business shutdown, Montana banks were eager to hear the U.S. Small Business Administration lay out details about the $2.2 trillion coronavirus rescue package.

Lenders had fielded calls from owners of restaurants, hotels and bars. They’d heard from the nonprofits forced to cancel fundraising events. Anybody with a canceled concert or a film festival on hold was in dire straits. Main Street Montana is looking for a lifeline.

If there was a Montana lender who skipped the Tuesday afternoon conference call with SBA, Western Security Bank Division President Mike Seppala didn’t know who it was.

“When I got on the call, there were 330 people. That’s almost every banker in the whole state,” Seppala said, who oversees six Glacier Western Security offices in Billings.

Lee Montana Newspapers visited with Seppala, as well as Stockman Bank Market President Wayne Nelson and SBA’s Montana director Brent Donnelly, about what borrowers needed to the know about federal financial aid programs being rolled out counter the economic challenges of the pandemic.

The three also offered advice on how distressed borrowers should respond to Montana’s suspension of foreclosures and collections on overdue loans.

Banks will be the front counter for businesses and other borrowers looking the tap into federal programs. SBA put out some early guidance late Tuesday, and more information is expected Friday and Monday. What information do people need to be gathering up now to present to lenders?

“We’ve got a checklist, a short little punch list that we can provide to people," Nelson said. "You don’t have to bring a whole lot. The SBA and the Treasury Department are trying to make this very streamlined, for obvious reasons. The driver of this on the payroll protection program is your average monthly payroll cost. What people can do right now is gather 2019 payroll costs. And you can include in that, health insurance 401(k) contributions, PTO, payroll taxes that were paid. And that’s going to come up to a gross number. It’s that simple. Give me the source documents. It could be QuickBooks, some other spread sheets that you provide to the bank, where you certify those are your payroll costs.”

Seppala added that because tax filing deadlines have been extended four months from April 15 to July 15, business who have 2018 information available, but nothing yet for 2019, should bring in the 2018 the information.

The Paycheck Protection Program is a newly created, $349 billion program intended to help businesses retain employees, rather than send them into the unemployment line, according to SBA. Banks will be the single point of contact for everything from applying for PPP to receiving funds to meet payroll. Businesses can receive federal loans to cover up to eight weeks of payroll and related overhead. The goal is to have the program running by Saturday, April 3. The funds are supposed be available the same day a business is approved for the loan. And, the loans will be forgiven as long as the money is used to keep employees on payroll and for other expenses like rent, mortgage interest and utility bills.

There are no requirements of collateral or personal guarantees. There’s not loan repayment required as long as Payroll Protection Program funds are used to pay for the qualifying costs. Money that’s spent on non-specified costs will have to be paid back over two years, starting six months after the loan was issued. The interest rate for payback is .5%.

Keeping workers on payroll is the key to not having to repay the loan. No more than 25% of the forgiven loan amount can be for non-payroll costs.

Donnelly said his SBA Montana office has received hundreds of calls from businesses looking for payroll help. Specific information about the program is available online.

Important for businesses who have already laid off workers, the Paycheck Protection Program is available retroactively to Feb. 15. Workers can be rehired through June 30.

Who qualifies for the Payroll Protection Program? Is just for for-profit businesses?

All businesses, including nonprofit groups, veterans’ organizations, tribal concerns, sole proprietorships, and self-employed people all qualify, as do independent contractors. Businesses with 500 or fewer workers qualify, with some exception for certain industries that have specific limits set by SBA. The maximum loan is $10 million.

What’s available now for the non-payroll expenses? What’s out there for a business that’s seen its market disappear because of travel restrictions or forced closures, like someone in the tourism industry?

The Economic Injury Disaster Loan is available now, Seppala said. It works better for non-payroll expenses. “The Economic Injury Disaster Loan is a loan that small businesses can apply for. If you are successful applying for that loan, you will be sent a check for $10,000 within three days from the SBA,” Seppala said. “It will get people $10,000 pretty quickly if they qualify for that loan.”

The interest rate for the EIDL loan is 3.75%.

“The EIDL is for working capital specifically, and in the application is the SBA definition of working capital. Payroll is part of the working capital definition. However, if you put payroll into your EIDL loan application and you take that loan, you can’t do the same thing with the Paycheck Protection Plan. You can’t double dip,” Seppala said.

The Payroll Protection Program is going to offer considerably more payroll help than the EIDL.

Repayment is deferred one year on Economic Injury Disaster Loans related to the pandemic. Previous EIDL loans are also deferred for a year.

Is there more than $10,000 in assistance available through EIDL? This is the kind of loan a business might get after its economy was wiped out for several months by a natural disaster, right?

Yes. Nelson said he’s working with a grocer on the border of Yellowstone National Park who has seen its extremely seasonal opportunity to turn a profit evaporate as the park is now closed.

SBA offers up to $2 million in assistance per small business through EIDL. The money can be used for paying accounts payable or fixed debts, as well as payroll. The loan is supposed to cover bills that can’t be paid because of the pandemic’s impact.

While the interest rate for for-profit businesses is 3.75%, nonprofits receive an interest rate of 2.75%. Borrowers have up to 30 years to pay the loans back.

“They’ve opened it up to nonprofits," Nelson said. "I was working with one yesterday, and they needed money now. They had some events that were canceled, and those were their fundraisers. And so, they got on the EIDL page, got $10,000 that will be deposited Friday in their checking account. The zoo is looking at this. They had to cancel their Wild Affair. How about MSU Billings? They had to cancel the wine fest. Those are big money makers for those entities.”

There have also been steps taken to help borrowers with payments due on existing loans, right? The SBA is going to make loan payments for borrowers on existing Small Business Administration loans for up to six months, right? Tuesday, Montana Gov. Steve Bullock announced that foreclosures and evictions were suspended and that late fees couldn’t be charged. The governor’s order lasts though April 10. How important is it that people able to make payments on mortgages and other loans still contact lenders to explain why payments aren’t coming?

“With the SBA program (for existing loans) there is some forgiveness," Nelson said. "That’s a little bit different, that’s almost like grant money. But the deferments we’re talking about, loans with your mortgage company, your business loans with the bank, your obligation is not forgiven, it's just deferred. If you communicate with your landlord, or your bank or your vendors, that two-way dialogue, that gets you lots of places. That means a lot in the business world to have open, good communications so that you can work jointly to solve the financial problem in front of you.”

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