PPP loans a ‘lifeline’ as Tri-Cities struggles to put Phase 1 behind
As Tri-City business and civic leaders work to tame local Covid-19 infection rates so more businesses can open, some of the Mid-Columbia’ biggest employers say forgivable paycheck loans were a “lifeline” that helped them keep valuable employees.
Benton and Franklin counties moved into a modified version of Phase 1 of Washington’s Safe Start economic recovery program in early July, the same time the U.S. Small Business Administration released the names of the millions of U.S. companies that received Paycheck Protection Program (PPP) loans through the federal Coronavirus Aid, Relief, and Economic Security, or CARES Act.
Economic recovery and the millions of dollars in PPP loans that flowed to the Tri-Cities are connected. For businesses to revive, they need to be in business. Employers who received PPP loans say that’s just what happened.
“To have that government support was a relief. It reduced the stress,” said Chris Senske, owner of Senske Lawn & Tree Care Inc., a Kennewick-based landscaping firm with branches in Washington, Idaho and Utah.
Senske received between $2 million and $5 million – the SBA gives ranges rather than exact amounts. It was one of nearly 500 Tri-Cities companies that received $150,000 or more. Another 2,200 received up to $150,000.
Senske said the company used about 83% of its PPP loan for salaries and the balance for other allowed expenses such as rent. The money helped it manage the growing balance in its accounts receivable as customers fell arears on bills and the company stopped sending out reminders.
“We had a lot of employees were potentially at risk for their jobs,” he said.
It used the PPP money to keep all its 472 employees, including bringing back people who were laid off in the beginning of the pandemic. It plans to apply to have the loan forgiven.
The Tri-City economy is far from recovered.
A modified version of Phase 1 is still heavily restricted. The state authorized the modifications after Tri-City Development Council and other groups pled for relief, telling the governor the community was dying.
Dr. Amy Person, health officer for the Benton-Franklin Health District, said the reopening was tailored to address the services area residents told the department they want most – dining, shopping and dog grooming.
The health district together with the TRIDEC and other civic and business groups are promoting social distancing and mask wearing in a bid to move to a modified Phase 1 or even Phase 2, which would further loosen restrictions.
Person said she’s optimistic during a weekly “Coffee with Karl” Zoom meetup hosted by Karl Dye, president of TRIDEC.
“When we have the mayors pushing public health messages, this community is going to get through,” she said.
Goodwill Industries of the Columbia, a Kennewick nonprofit serving people with disabilities, is another local organization that received between $2 million and $5 million in PPP loans, according to the SBA database.
The money kept more than 350 people on payroll with benefits during a shutdown that lasted more than three months, said Ken Gosney, executive director, who called the loan a “lifeline.”
It was a similar story for Lampson International, the Kennewick based crane manufacturer, another company that received between $2 million and $5 million.
“It helped us maintain our current level of staffing,” said Kate Lampson, director of public relations and marketing.
Jim Davis, chief executive officer of Tri-Cities Community Health, said visits to its clinics in Kennewick and Pasco dropped by half when the stay-home order hit.
A typical business would cut staff, but the health clinic was loath to lose its experienced dentists, hygienists and other professionals. Its loan, between $2 million and $5 million, allowed it to keep a staff Davis said would take years of recruiting to replicate.
Routine dental visits were the hardest hit. The clinic kept its dentists on payroll even with reduced workloads. Hygienists, prevented from working by the stay-home order, were put on “standby” status. That allowed them to collect state and federal unemployment benefits while the clinic continued to pay fringe benefits, including health insurance.
“I didn’t want to even think about any of our team having to go through a pandemic without health insurance,” he said.
When dental work was authorized to resume, it brought its staff back to full-time status.
By early July, patient volumes had returned to about 80% of pre-Covid-19 levels.
“It enabled us to get through that significant downturn. We didn’t have to worry about where to get the money for paychecks,” Davis said. It will apply for loan forgiveness.
Christensen Inc., a Richland-based fuel, lubricants and propane distributor, said that although it continued operating as an essential business, it recorded significant declines in the second quarter due to the pandemic.
The company was largest PPP recipient in the region, receiving between $5 million and $10 million, the SBA said.
“The PPP loan assistance program accomplished what it set out to do. It allowed Christensen to keep team members employed, avoid layoffs and continue to support our communities during this time of crisis. We’re grateful for this assistance and have seen business slowly start to come back here in the third quarter,” the company said in a written statement in response to a Journal of Business inquiry.
Michael Atkinson runs two staffing firms in Kennewick. Agrilabor Inc. and Atkinson Staffing Inc. provide workers for dairies and plants processing potatoes, onions and other crops. Agrilabor specializes guest workers who come to the U.S. under the H-2A visa program.
Agrilabor and Atkinson Staffing received between $2 million to $5 million each.
The PPP loans offset the soaring cost to follow Covid-related rules. Atkinson created a sewing division to produce face masks, which weren’t available at the start of the pandemic. It had to increase the number of vehicles it uses to transport workers to jobs – which drove up the need for trained drivers, operating expenses and insurance.
Most of all, it helped Atkinson raise pay rates to incentivize workers who otherwise would have earned more on unemployment because of the $600-a-week federal benefit that expires in July.
“Our expenses have gone up incredibly to manage the virus, and we have to pay more to incentivize people to come to work,” he said.
For the week of June 21-27, the Washington Employment Security Department reported 696,272 unemployment claims, a decrease of 3.1% from the prior week but 473% higher than the same week a year ago.
Locally, the unemployment rate was 12.3% in May, the most recent available. Unemployment has eased slightly from the pandemic high of 13.5 % recorded in April.
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