Loans keep business afloat

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Ouray County firms net more than $8M in PPP funding

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Ouray County businesses received more than $8 million through the Paycheck Protection Program this spring, according to data released last week by the Small Business Administration.

Nine Ouray County businesses were identified in the SBA records as recipients of loans between $150,000 and $1 million, while 215 smaller loans were made to unnamed businesses and organizations in Ouray and Ridgway.

Businesses and nonprofit organizations with fewer than 500 employees were able to apply for the funding through approved banks, and the loans were guaranteed by the SBA. Under the federal Coronavirus Aid, Relief and Economic Security (CARES) Act, the loans can be partially or fully forgiven if businesses meet certain criteria, including the percentage of the loan used to cover payroll costs.

The largest local loans went to K & K Concrete, Inc. and Ouray Silver Mines, which both received between $350,000 and $1 million, according to the SBA.

K&K co-owner Michelle Kyne said the company received about $400,000, most of which was used to keep about 17 employees paid.

While construction was deemed “essential” and allowed to continue in Ouray County, “Most of our jobs are in Telluride,” she said, and were halted completely when San Miguel County shut down the industry in March. “At that point we laid all our guys off. Then we applied and got the PPP loan, so we were able to pay them before we were able to slowly go back to work.”

Ouray Silver Mines received $421,000, and “utilized those funds for nothing but direct payroll,” Aurcana Corporation Chief Financial Officer Buck Andrews said. The loan amount was based on the number of employees in the first half of 2019, which was 16; however, they also used the money to help hire new people this spring, as they’d planned to before the pandemic. “It was a big help for us as we pressed forward on the Revenue-Virginius Mine,” he said.

Between April and June, “we went from 16 to 42 people,” Chief Executive Officer Brian Briggs said. The new employees include miners, mechanics and electricians.

“It’s been crazy, when we first started the hiring, a lot of these individuals were coming from projects in Alaska,” he said. “We’d hire them and then stuff them in isolation for 14 days.” The PPP money was used partially to pay those employees while they were in isolation, as well as for other employees who needed to quarantine after traveling for business or personal reasons.

“It was really about retaining people,” he said. “Having the PPP funds available really made that much easier. It made it a much easier choice to say ‘go home, continue to be paid, and make sure that you’re safe and the rest of us are safe.’”

According to North American Industry Classification System codes used in the SBA data, “accommodations and food service” businesses received the largest amount of money in Ouray County, at least $2,233,579.50. That includes hotels and motels, restaurants and RV parks and campgrounds. Two restaurants were among the largest recipients of PPP funds in the county: Ouray Brewery and Taco del Gnar, which each received loans in the $150,000 to $350,000 range.

Erin Eddy, owner of Ouray Brewery, said he received about $230,000, which was used to pay all year-round employees while the restaurant was closed.

Twin Peaks Lodge & Hot Springs laid off its entire staff of 40 employees in March, after hotels were ordered to close to anyone other than essential workers. The hotel and short-term condos, which are rented through the hotel, “had zero guests for over two months,” co-owner Craig Hinkson said. But while rooms were empty, “the mortgage payments still were still coming in, we had hundreds of thousands of dollars of bills coming in, and zero money coming in.”

The loan he received helped pay those mortgages, he said. “Property taxes used over half of our PPP money, but we were able to pay them on time,” Hinkson said. Some of the money was also used to hire back employees; most of the 40 who were laid off have now returned, he said.

“Without the PPP program, this year would have been a disaster. It helped a lot, it provided some liquidity,” he said.

He praised Citizens State Bank, who “pushed it through for us, and came through for us at a time when we were really quite desperate.”

Businesses in construction and retail trade, a category that includes supermarkets, liquor stores and sporting goods stores, were the next largest recipients, with more than $1 million in loans awarded to each sector.

Like K & K Concrete, Allison Construction was hit particularly hard by the shutdown in San Miguel County, which halted some of their ongoing and upcoming jobs, owner Bob Allison said. Some Ouray County projects were also slowed or stopped due to the pandemic, and “some clients didn’t want us there” due to the risk, he said. The company’s own employees also dealt with quarantine restrictions, lack of childcare when schools closed and concerns for their own health, Allison said.

With the PPP loan he received, “we were able to save 18 jobs,” he said.

Ten of the loans were made to nonprofit organizations. The largest was to Second Chance Humane Society, which received about $180,000 for 40 to 45 employees, Executive Director Kelly Goodin said.

The other loans ranged from just over $9,000 to a theater nonprofit to $64,500 to an organization working in “Other Grantmaking and Giving Services.” Two religious organizations, one each in Ridgway and Ouray, received loans of $24,000 and $16,100.

Goodin said Second Chance used the money to pay staff while its thrift stores, which usually account for 75 percent of the organization’s revenue, were closed. Store employees were furloughed without pay, but shelter staff continued working throughout the closure.

“In many ways, it saved our butts,” she said, “but it was a really frustrating process in the beginning.” The application changed while the organization was working on its paperwork, though she credited Alpine Bank with working through the weekend to help.

The loan was also used to cover expenses including utilities and rent, she said.

The 215 loans under $150,000 ranged in size from $600 to a self-employed individual in graphic design services, to $146,600 to a restaurant in Ridgway. Just over one-third were for $10,000 or less, and nine loans were more than $100,000.

The Plaindealer received a $17,105 PPP loan for four employees.

Alpine Bank processed 118 of the local loans, while Citizens State Bank handled another 57. Both banks had to be approved by the SBA before they could begin processing the loans.

“It was a rough start because the program got rolled out so fast,” Alpine Bank Senior Vice President Dennis Alexander said.

Once they were approved, Citizens reached out to its customers and other businesses in the community, and began receiving referrals from businesses elsewhere who couldn’t find a local bank to work with them, Chief Lending Officer Jessica Frigetto said. During the first round of funding, the bank had 80 applicants for PPP loans, all of whom were approved. She attributed that to having a “more manual approach than some of the larger banks,” where customers filling out forms got stuck in an automated process.

“Small banks who have this personal connection with their clients really worked hard to be a resource,” Chairman and CEO Doug Price said. The bank ultimately provided about $27.7 million in 243 loans, saving 2,500 jobs, Frigetto said.

“Once we got into the swing of things,” Alpine was able to process applications, get SBA approval and provide the loans within a day, Alexander said.

“I was amazed at how hard the SBA worked to make this program successful, and I was amazed at how hard (U.S. Rep.) Scott Tipton’s office worked to make this program successful, and (U.S. Rep.) Ed Perlmutter in Denver,” Price said. “It really was heroic what the bureaucrats did to make it work.”

While data released by the SBA shows none of the smaller loans processed through Alpine Bank were used to retain jobs, Alexander said that’s likely due to “a disconnect” between the application and reporting process. Otherwise, “they wouldn’t have qualified for the program to start with,” he said.

The bank had to verify businesses’ employee numbers and payroll to determine the size of each loan.

Determining how the loan was used and what percentage was used to pay employees will be part of the process to apply for loan forgiveness, which Alpine and Citizens are expecting to start handling soon.

Alpine Bank isn’t accepting those applications yet, because “we’re waiting for the process to become solid and go forward from there,” Alexander said. He expects to be processing those by the end of July.  The rules for applying for forgiveness have changed a few times since the CARES Act originally passed, extending the window of time in which the money needed to be spent.

Goodin said there has been “a bit of frustration, as far as the requirements keep changing.”

“It’s a little unsettling,” because the nonprofit is “kind of depending on it being forgiven,” she said.

“We’re anticipating 100 percent forgiveness but until those guidelines come out, nobody knows for sure how that’s going to work,” Kyne said. Having to pay back some of the loan “would not be ideal, for sure.”

If not forgiven, loans issued before June 5 must be paid back within two years, at a 1 percent interest rate. Payments are deferred for six months. Loans issued after June 5, including eight in Ouray County, have a five-year repayment period.

Eddy said his accounting firm will begin going through the brewery’s PPP loan use next week, and said he’s waiting “to see what it’s going to actually cost us in the long run.” While he used the loan for payroll, he also spent about $25,000 for things like Social Security and Medicare, something he feels the government wasn’t up front about with PPP. “The government made it seem like it could be used for all payroll costs, but you could only use it for some of your payroll costs,” he said.

As cases continue to climb in other states, local businesses are also wary of a second wave of shutdowns, which could come while they’re still recovering from the prior closures.

“That’s a big concern. I don’t think this is going away,” Eddy said.

“We’re being a little more conservative,” Allison said. While construction has resumed, “we’re keeping the status quo, we’re not trying to take on too much.”

Hinkson said there are still a few employees, including in maintenance, who have not returned to work because “we’re just not sure we have the income to hire them back.”

“We scrutinize every purchase and every agreement, weighing it against a possible ramification of another closure,” he said.

At this time, things are still too uncertain for him to feel comfortable committing to spending money on certain things, for fear of another shutdown.

“If they did that, we don’t want to be overextended with contracts,” Hinkson said. “If they shut you down, it could come back and really hurt you.”