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News >  Business

Spokane-area businesses used PPP funds as lifeline

UPDATED: Sun., July 12, 2020

Garco Construction, one of eight area companies approved for PPP funding of more than $5 million, is main contractor on the $20 million, 2.1 million-gallon combined sewer overflow tank project north of the Spokane Public Library.  (JESSE TINSLEY/The Spokesman-Review)
Garco Construction, one of eight area companies approved for PPP funding of more than $5 million, is main contractor on the $20 million, 2.1 million-gallon combined sewer overflow tank project north of the Spokane Public Library. (JESSE TINSLEY/The Spokesman-Review)
By Thomas Clouse The Spokesman-Review

The list of local companies that sought and were approved for Small Business Administration money reads like a who’s who of Spokane-area business.

About 160 local companies were approved for more than $1 million each from the Payroll Protection Program, which was designed by federal officials to provide money to companies to pay their employees to keep them off unemployment rolls. While the program has had fits and starts and rule changes along the way, the list shows that a wide variety of businesses used the program to varying degrees.

Based on information released by the SBA, many of the recipients receiving the higher amounts were construction companies, which had projects shut down during Gov. Jay Inslee’s stay-home order. With business robust prior to the pandemic, many construction and manufacturing companies used the PPP money to retain employees.

Garco Construction of Spokane was one of eight area companies approved for PPP funding of more than $5 million. The company, which could not use all the money in the eight-week time limit originally established under program guidelines, gave a significant portion of that money back, Garco President Clancy Welsh said.

When the stay-home order shut down work, Welsh said his company’s staff, which can number as many as 400 during peak season, dropped by nearly a third.

”Once we got funded, we had a few projects that were deemed essential,” he said. “Then we ramped back up and brought everybody back to work. With ours, we spent 95% plus on payroll.”

Under the original rules of the program, companies were required to use 75% for payroll and the remainder they could use on things such as interest payments or rent. Congress later changed the rules to extend the time limit for using the money by several more weeks and dropped the payroll percentage down to 60% to help companies comply with rules that allow the money to be used as a grant rather than a loan.

One of the other Spokane companies approved for PPP funding from $5 million to $10 million was Incyte Pathology, of Spokane Valley. CEO Patty Sipes said the pandemic had a drastic impact on her business and the SBA program helped “ensure that (employees) had a company to return to.”

”Through retention of our expert staff, the funding ultimately provided the resources to pursue the addition of COVID-19 testing,” Sipes said in a provided statement. “Performing these tests locally, reducing result turnaround time by up to 90%, is service that is paramount for the community as we navigate reopening, surveillance testing and preparation to control future outbreaks.”

Money was approved for all kinds of area businesses, from gold ore mining companies to doctors’ offices.

The list includes senior care facilities and fresh vegetable merchants.

The group also includes a couple of outliers. Among the scores of companies that received from $2 million to $5 million were Alfreds Away LLC, which is the parent company for high-end rental company Stay Alfred Inc. CEO Jordan Allen announced in late March the company would be permanently closing April 1. But the company was approved on April 8 for PPP money of at least $2 million.

Through a marketing spokeswoman, the company declined to comment.

The only two religious organization to obtain PPP funding among the largest borrowers appear to be Catholic Charities Eastern Washington, of Spokane, and Real Life Ministries, of Post Falls.

Darin Blood, lead executive pastor at Real Life Ministries, said the funding initially helped the church retain staff, but church supporters have stepped up with donations.

“As such, it is important to note that 100% of the funds received are being given back,” Blood said in a written statement, “and we will not be applying for any forgiveness of those funds.”

The only school among the largest recipients was Gonzaga Preparatory School.

The only newspaper on the list was The Spokesman-Review. Publisher Stacey Cowles, as he did in an earlier story, said the newspaper obtained about $2.4 million of the PPP money to help retain employees at a time when advertising revenues had dropped by about half because of the pandemic and business shutdowns.

“We determined those funds would be extremely helpful in keeping folks employed,” Cowles said.

The newspaper, like most businesses, did not report on the original SBA application how many employees the money would support. Cowles said he wasn’t sure why that was left out, but said it was used to help retain about 240 jobs.

Melanie Norton, regional spokeswoman for the SBA, said businesses were not required to provide the number of jobs that would be supported by the funding on the original PPP application.

“But it is a requirement for the forgiveness portion,” Norton said. “Whether that was volunteered or not, the borrowers will have to provide it to receive forgiveness.”

The PPP program as outlined in its enabling legislation and a second funding round approved by Congress had ended, but the federal government restarted it Monday.

As of Wednesday, it still had about $130 billion available for small businesses, Norton said.

“If someone didn’t get it in the first or second rounds, there is still a chance to get funds,” Norton said. “We wanted to make sure (those funds) are accessible to any small business or nonprofit.”

Jack Heath, president and chief operating officer of Washington Trust Bank in Spokane, said some companies have been criticized in the media for not listing the number of employees supported by the money.

He said those numbers were provided as part of the applications done by his bank, but the SBA left three blanks for banks to fill out regarding the number of jobs. They included: “existing,” “created,” or “retained.”

Washington Trust put its clients’ job numbers in the “existing” box only to find out that SBA pulled the jobs numbers from the “retained” field.

“As a result, many loans processed by Washington Trust Bank and a host of other lenders appear to have retained zero jobs” when that was not the case, Heath said.

The number of retained jobs will be required as part of the forgiveness applications, which the SBA has yet to begin accepting, he said.

“I think the approach to who got the money and who didn’t is missing the point,” Heath said. “As I look across the universe of clients who secured these funds, the questions I ask are: Were they adversely impacted by COVID? And did they make decisions to employ people that they would not have if not for these funds? The answer for our clients is, absolutlely.”

Doug Wolford, a vice president at Washington Trust who is the SBA department manager, said most companies were required to show how many employees they had as of Feb. 15.

The whole point of the program was to keep those employee on the payroll.

“They were trying to keep that employee compensated and the job open,” Wolford said. The money was used as an incentive “to continue employment ties to the employee. That was the goal.”

Welsh, of Garco Construction, said one issue the company had was getting employees back who had drawn unemployment. Bringing those employees back was key when the company has about 30 projects in various stages of completion.

“We had a lot of field employees who thought unemployment would be better than going back to work,” he said. “Unemployment was pretty attractive based on state and federal combinations of the weekly payment. So, we have been proactive in paying hazard pay. For those who did want to work, we wanted to make sure there was an incentive not to be on unemployment.”

Sipes, of Incyte Pathology, said her company had to make the difficult decision to furlough employees prior to getting the PPP funding.

“In March, when local quarantines were initiated, our specimen volume was reduced by 75% within a two-week period,” she said.

“The opportunity to apply for a federal PPP loan was a chance to help bridge the gap created from the reduction in testing, to reinstate employees as quickly as possible and to cover medical insurance premiums for our team of over 350 employees during this tumultuous time.”

Washington Trust’s Heath said the impacts of the pandemic are not yet over, but the PPP was an effective tool in getting many local businesses past the initial shock.

“The point was to help businesses stressed by COVID to retain employees and keep open,” he said. “As far as I’m concerned, this program accomplished that.”

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