Stream of SBA funds begins to flow to Minnesota small businesses
Federal aid has started to flow to small businesses in Minnesota closed or affected by the economic effects of the coronavirus pandemic.
River City Builders and Millworks, a building contractor near Northfield, received nearly $ 300,000 from the Small Business Administration’s paycheck protection program at the end of last week. It was one of the first Minnesota companies to benefit from the $ 349 billion emergency aid that Congress and President Donald Trump created last month.
“It was important to us because it helps the cash flow,” River City controller Heather Kluge said Monday. “We don’t know where the economy is going. We don’t know how to project the cash flow.”
JIT Powder Coating Co. of Farmington received $ 500,000 from the SBA at the end of last week.
“The loan is huge for us,” said Tim Milner, who started the business 27 years ago. Today it has 70 employees.
“Our business is down about 20% this year,” Milner said. “I have kept our employees at full pay. This will help us replenish some of the money we have spent over the past two months.”
Milner said he applied for the loan from Deerwood Bank and the process was swift. “Deerwood didn’t even need my finances because they’ve had them since the start of this year.”
Kluge said River City applied for his loan through Frandsen Bank to Dundas.
“The SBA app was user-friendly,” Kluge said. “A two-page request and they wanted last year’s tax returns and the last 12-month payroll report. They relied on that.”
River City put 15 workers on leave last month after most economic activities shut down and Americans have distanced themselves to try to slow the spread of the deadly disease. Now, she said, the company will recall workers on leave.
The loan proceeds are designed to cover 2.5 times the payroll of the 20 workers, plus some common business expenses such as rent.
As part of the program, the SBA guarantees small business loans of up to $ 10 million at an interest rate of 1%. The loans will be repayable as long as the money is used for payroll and specified expenses.
Banks across the country began receiving loan applications on behalf of the SBA on April 1. There has been anecdotal evidence that small community banks were more agile in dealing with applicants than larger ones, and some business owners have complained about delays at the SBA.
The federal agency said the volume of requests in less than two weeks was several times greater than what it normally processes in a year. As of Sunday, the agency had approved more than 860,000 loans amounting to $ 213 billion.
“This is the largest economic stimulus package in our country’s history,” said Brian McDonald, interim director of the SBA Minnesota on Monday.