PPP loans revised for Alaska’s seasonal businesses

By
Suzanne Downing
-
6

A rule change released by the Treasury Department will allow Alaska’s hundreds of seasonal businesses to choose a different 12-week expense period when applying for a Paycheck Protection Program loan — a period that more accurately reflects their operating payroll.

The Alaska congressional delegation has pressed the Trump administration for weeks and has had multiple conversations with President Donald Trump and Treasury Secretary Steven Mnuchin, asking the federal government to issue guidance that accommodates seasonal employers devastated by the coronavirus pandemic. They finally got through to the bureaucrats that the PPP program was failing many Alaska businesses that only staff-up in the summer months.

“In Alaska, the summer tourism season doesn’t get going until late-Spring, and many seasonal businesses have few, if any, employees during the covered period to base payroll on for a PPP loan,” the Alaska delegation said in a statement. “These great local businesses, already hit with extreme disruptions to travel and tourism this year, were functionally shut out of the Paycheck Protection Program, even though they had employees that they were responsible for paying in May, as well as rent and utility payments due.

“We were not going to allow this vital sector of Alaska’s economy to slip through the cracks. We thank President Trump and Secretary Mnuchin for working with us to implement this commonsense fix that offers the flexibility seasonal employers need to fairly calculate their expenses, keep their businesses afloat, and their employees on the payroll.”

The PPP is a temporary program operated by the Small Business Administration and established by the CARES Act. It offers small businesses struggling from the economic down-turn access to low-interest loans to cover payroll and other expenses over an eight-week period.

But the way it was designed, the business’s loan amount was calculated based on a 12-week period beginning on Feb. 15 or March 1, 2019.

As a result, many businesses with little or no operations or expenses during that time of year found themselves eligible for only minimal PPP loan relief.

Under Treasury’s interim final rule, seasonal employers, such as tourism companies or guides, can choose any consecutive 12-week base payroll period between May 1 and Sept. 15, 2019 to determine their PPP loan amount.

Due to the urgency of the challenges facing seasonal employers, the Treasury Department has made the interim final rule effective immediately. The rule authorizes all lenders to use the alternate criterion when originating loans for seasonal employers. 

The final day to apply for and receive a PPP loan remains June 30, 2020.

6 COMMENTS

  1. I was just reading an article that explained how the Small Business Administration’s ‘portal’ crashed, four minutes after this round of Wuhan v relief funding opened today. This time it wasn’t the banks but the SBA itself. They were overwhelmed by the amount of applicants. Most are still waiting. I don’t like to use the word ‘incompetent’ unless deserved, but it’s looking like the SBA itself is stalling the program this time. Incompetent or ‘unwilling’ to follow through. Is this another “accounting” trick to keep Americans, desperate to save their businesses, on the hook and behaving themselves? Darned if it doesn’t look that way. Just like the ‘models’ of Wuhan v., the story changes with the tide, or sooner. I wager none of the elitist, wealthy, political contributors have to wait. After they get ‘theirs’, the ‘little people’ get theirs, or a minimal slice of what’s left.

  2. “Major donors to President Donald Trump’s presidential reelection campaign have won coveted loans from the Paycheck Protection Program, the new government effort to provide a lifeline to small businesses under duress because of the coronavirus pandemic…
    The loans…have been out of reach for tens of thousands of small business owners, many of whom have faced delays and denials.
    The largest known recipient of small business rescue money has been a set of luxury hotels run by Archie Bennett and his son Monty Bennett. The pair have obtained over $59 million in PPP funds for Ashford Hospitality Trust and Braemar Hotels & Resorts, holding companies used to own and manage a range of hotels, including the Ritz-Carlton in St. Thomas.”
    (The Intercept)

  3. The loans are forgiven only if you maintain basically the same historic payroll. If this money is used only for payroll, and you achieve that goal, you’ll last 2.5 months, however all other overhead expenses, rent, utilities, inventory, etc is on you. If you were allowed to stay open over that time, this can help, but it’s still going to hard to meet the threshold for complete forgiveness, and you’ll have to start paying back these loans in the fall.
    If you are product or asset based business, then the help with payroll isn’t much help at all. You are better off looking into disaster relief loans, which aren’t forgiven. If you were totally shut down, and assuming you aren’t concerned with the forgiveness, associated with the PPP, then that loan will last you about a month.
    Also, if you furloughed some employees, if they are in the service industry and are making less than 50k a year? Good luck getting them back, and you may hear them say they “won’t feel safe coming back before the end of July”; they are making that 50k a year on UI, due to the $600/Wk bonus the feds have added which, coincidentally runs out at the end of July..

    Lastly, food for thought is most small business owners don’t put themselves on payroll; they make their money on the net profit of the business. NONE of these loans have any provision for that.

    So no matter what, if you are an employer, and you’ve been forced to shutdown or the market dictated you essentially were, you WILL lose significant income, have to get additional private financing, eliminate your savings, or close up for good. If you do survive, Provided you’ve found a pile of money with which to bribe your employees off the UI and back to work, you’ll most likely owe the government and banks money, to pay for a cessation of business that they held a gun to your head (the power of government) and told you you had to do. How’s that for a switch?

    This is why these sorts of things require more nuanced solutions than blanket ones, and more common sense than hysteria. The American people CAN be trusted. If we cannot, then why allow the facade of freedom to persist any longer?

  4. Lawrence,
    I believe you hit the nail on the head…”the facade of freedom”.
    Looking at the destruction caused to local economies across the U.S. which resulted from the forced lockdowns, we can clearly see that America has moved into the realm of a strong arm authoritarian type of government.
    This top down approach to decision making leaves little imput from “we the people” when crises arise…and make no mistake, “disaster capitalism” is here to stay.

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