BOONE — Nearly 100 businesses in Watauga County have received Paycheck Protection Program loans of $150,000 or more, according to records released last month.
On July 6, the Trump Administration disclosed a database via the Small Business Administration detailing businesses across the country that received more than $150,000 in funds through the Paycheck Protection Program.
The allotments were one of the more significant programs to be implemented as part of the CARES Act, which provided economic relief to help mitigate the effects of the COVID-19 pandemic. The information was provided in part due to pressure from Congress as well as organizations such as ProPublica, a nonprofit organization of investigative journalists, filing suit under the Freedom of Information Act.
The federal government provided $659 billion to businesses nationwide through PPP, and banks across the country approved nearly 5 million loans with 661,218 businesses and organizations qualifying for loans between $150,000 and $10 million. In North Carolina, 121,913 businesses received loans, the vast majority of which were less than the $150,000 mark.
Businesses, nonprofits and other organizations with 500 employees or fewer were eligible to borrow as much as 250 percent of monthly payroll expenses to cover employee salaries between Feb. 15 and June 30. Additionally, businesses were able to use the loan amounts to cover interest on mortgages, rent payments, leases, utilities and coronavirus-related expenses.
PPP loans have a 1 percent interest rate with the potential for the loan to be completely forgiven if certain criteria are met.
The loans are eligible to be forgiven depending on the number of employees the business retained. For example, if nine out of 10 employees were retained and the one remaining employee was terminated, 90 percent of the loan amount that the business received would be forgiven. Businesses had until Aug. 8 to apply for PPP loans, after the initial date had been extended from June 30.
Another wave of PPP stimulus funds was introduced by Sen. Marco Rubio (R-FL.) and Sen. Susan Collins (R-Maine) ahead of Congress’s scheduled recess from Aug. 10 to Sep. 7, but the bill stalled during negotiations. The bill would have taken the $128 billion in funds left over from the first wave of funding and increased it to $190 billion, while focusing on sustaining businesses that had lost 50 percent of their revenue.
“It’s a shame because the new bill was specific for businesses that are still in trouble that showed a 50 percent loss in revenue to help them stay in business until (the pandemic) gets better. It’s sad, it really is. It could have been a great package, but we just don’t know,” Vincent Muratore, president of Stone Bank’s SBA Division, said.
Muratore shared Rubio’s sentiments that a new round of layoffs could come throughout the months of July and August until the Senate reconvenes after Labor Day weekend. Unprecedented nationwide unemployment has gradually decreased since the height of the pandemic. In July, unemployment improved to 10.2 percent from 11.1 percent in June after reaching near Depression-era unemployment at 14.7 percent in April.
According to Muratore, the most severely affected industries continue to be hospitality, restaurants and fitness centers/gyms, the latter of which have been ordered to remain closed in N.C. Despite the negative consequences of the pandemic, Muratore remains positive about the country’s economic outlook.
“There’s still new business being done,” Muratore said. “Our little bank has over 100 million impending SBA loans. So we still have businesses that believe and are looking to get business, acquire businesses, start businesses even in this environment, which is very optimistic.”
The effects of the PPP program locally have been significant and far reaching, as many businesses have accessed the funds and have been able to retain employees and staff through the publicly financed loans.
Grandfather Mountain Stewardship Foundation is just one of the many businesses or organizations that was able to finance its employees and operations for the timebeing. The GMSF received a loan amount between $350,000 and $1 million on April 6 and was able to retain 97 employees.
According to GMSF President and Executive Director Jesse Pope, the nature park was hit hard by the economic repercussions of the pandemic, as its board had to make the difficult decision on March 14 to close the park. Throughout the first two weeks of the closure, the park was able to retain its staff, but as the prolonged effects of the pandemic became apparent, it had to reverse course and furloughed about 30 part-time positions for three to four weeks until these positions were called back when the park reopened on May 15.
“We applied for PPP funds as soon as we could in order to retain our staff through the closure. We had already spent the funds before the deadline was extended, so the increase in time was not very helpful for us, since we used almost all our funds on payroll. Payroll is one of our largest expenses, since we own all the buildings and facilities. We did use some of our funds on qualifying utilities, but most of the funds were used for payroll,” Pope said.
While temporarily closed, the park lost about 50 percent of its revenue in March, 100 percent in April and 70 percent in May. Since the park’s revenue is closely tied with its operations, it is expecting a decrease in revenue between 50 and 60 percent by the end of the year as it continues to operate at half capacity.
Pope said that the PPP program helped cover about five weeks of payroll during a “critical time” in which it had almost no revenue coming in.
“If it wasn’t for the PPP loan and some great philanthropists stepping up to help, we would be in a really different financial situation right now,” Pope said. “We are really concerned about the fall and winter as it remains uncertain how our revenues will be impacted into the fall season. The SBA loans have been a constant moving target. We are just now receiving information on how to apply for forgiveness of the first PPP loan. We will wait and see how the loan forgiveness process goes, to decide whether or not we will apply for further assistance.”
On a positive note, Pope praised the local banks which have stepped up to help answer questions and make the process as simple of possible. Pope mentioned Mountain Community Bank and Hallie Willis specifically, whose staff worked during weekends to process thousands of loans for small businesses in the community.
Lees-McRae College received a loan between $1 million and $2 million on April 9 and was able to retain 223 employees. College President Lee King said the organization used the entire loan amount to maintain full employment levels throughout the pandemic.
“The PPP loans allowed us to maintain our full staffing levels and they placed us in a strong position to be able to welcome back our students and resume normal operations this week,” King said.
Several local businesses showed up as having retained zero employees in the SBA PPP database. One such business is Sugar Mountain Resort. However, Gunther Jochl, president/owner of Sugar Mountain Resort and mayor of the Village of Sugar Mountain, said that the number is inaccurate.
“Not only did we use (the money) for employees that we have, we also retained more employees than we usually do because they didn’t have a job to go back to,” Jochl said. “We filed the PPP plan with the bank like we’re supposed to and they have all the information. We didn’t have to shut down. We (were able) to retain everyone.”
Sugar Mountain Resort has been operating throughout the pandemic and has hosted events such as its Fourth of July celebration, the Fine Art & Master Crafts Festival, and a mountain bike championship held this past weekend.
“We hired the normal scope of people,” Jochl said. “Instead of one lift for mountain biking, we’ve been operating two lifts. So we’ve been doing good. Of course, we have additional expenses with protective equipment for the employees and the customers, and we have specific guidelines that we have to follow to apply (for the loans). Whatever doesn’t get forgiven we have to pay back at an interest rate.”
In Watauga County, 95 businesses were included in the SBA database, with two businesses, Glenbridge Health & Rehabilitation Center and Jackson Sumner and Associates, receiving loans between $1 million and $2 million.
For Watauga County-based business and local landmark Tweetsie Railroad, its loan, in the $350,000 to $1 million range, is key to its survival and success due to the pandemic’s effect on business. The state health department ordered the local amusement park to close after it briefly reopened for limited train rides only this summer.
According to Tweetsie Railroad President Chris Robbins, reopening of the park remains uncertain at this time.
When Boone businesses started shutting down in March, Tim Herdklotz — the co-owner of Booneshine Brewing Co. — said his business didn’t have the ability to keep operating at the same capacity as it was pre-pandemic with its 60 employees. Even though the business had to release part of its staff, Booneshine tried to help its employees in several ways, such as offering one free meal each day the business was open while offering take-out.
“It’s a challenging time for running any business, especially a small business,” Herdklotz said. “We decided as a business that we were going to react to this out of a place of hope rather than fear. It doesn’t make things easy. It doesn’t mean we don’t have a lot of concern. We’re just continuing to have a hopeful outlook, and continuing to look to see how to make things better for our employees and community in the future.”
Herdklotz and Booneshine co-owner Carson Coatney have invested quite a bit in the last two years into moving the brewery to its new location on the east side of Boone. Herdklotz said the brewery has a fair amount of debt as a small business, and when the pandemic hit it was important that the two owners figure out how to sustain the business moving forward.
When Herdklotz and Coatney heard about the PPP loan, Booneshine immediately submitted an application. Herdklotz said the $240,000 the business received through the loan helped Booneshine retain some staff while they were only offering take-out, as well as to bring the brewery back to its full staffing capacity during Phase 2. Funding from the PPP loan was used toward payroll with some put toward the use of utilities, Herdklotz said. Booneshine plans to apply for PPP loan forgiveness through the Small Business Administration when applications potentially open in August.
The pandemic’s ever-changing conditions continue to have an evolving effect of businesses such as Boone Drug Inc., said company president Corey Furman. Boone Drug has had to reduce its hours of operations at some locations, curtail employee hours and add new policies such as isolation and cleaning procedures. Furman added that Boone Drug has experienced a significant reduction in sales during the last few months.
“We receive new information at least two to three times a week of things we might want to consider changing or some regulation that forces us to change things we’re doing,” Furman said.
Boone Drug was a PPP loan recipient in the $350,000 to $1 million range for its 15 locations. Furman said the business is going to give back PPP funds that weren’t used for paying employees for any COVID-19-related issues. The issues could be paying an employee during quarantine while waiting on a test result, paying an individual who is caring for a sick loved one or other situations covered under the CARES Act, Furman said. PPP funds were not going to be used for items such as utilities, as those elements do not fluctuate depending on sales, Furman said.
To help the communities it serves during the pandemic, Boone Drug has added curbside delivery, provided free hand sanitizer and added a free prescription home delivery service in the county.
In Ashe County, helping to cover a majority of its staffing, Ashe Services for Aging received a loan between $350,000 and $1 million, which has helped to keep its members safe and the ship afloat, according to Executive Director Patricia Calloway.
“We were advised by our audit firm that it was an option. We employ between 140 and 150 people, depending on the given day. That amount was what would have been necessary to cover that eight weeks,” Calloway said. “At the time, we were very uncertain about a lot of our funding sources. We are funded through a variety of grants, senior services and Medicaid, a lot of sources that were uncertain.”
At the same time, the senior center had to worry about more than just funding. Calloway said that the combination of higher-risk individuals in a congregate setting made the fear of an outbreak the immediate focus, and not having to worry about whether they could pay their staff was one less hurdle.
“It was huge. We were able to focus our efforts and our energy into serving the people in our community in the best and safest way possible,” Calloway said.
Calloway added that the senior center’s finance officers and audit team had to work in tandem with LifeStore Bank in a long process to get the loan approved and completed. Calloway said that the senior center received roughly $600,000, enough to completely cover salaries, mortgages, benefits and utilities for eight weeks.
“We felt like it was necessary that we felt safeguarded so we could focus on the work we were doing,” Calloway said.
To view the SBA PPP database in its entirety, visit projects.propublica.org/coronavirus/bailouts and enter a zip code to see the business name, loan amount, industry type, number of jobs retained, the lender and the date the loan was approved.
Jamie Shell, Kayla Lasure, Ian Taylor and Moss Brennan contributed reporting to this story. Moss Brennan created the dashboard below.