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WARRIOR AID: Springfield Warrior Sports owner Andy Mariage says his business has received around $24,000 in Paycheck Protection Program loans at a time when he invested in a new building.
SBJ photo by McKenzie Robinson
WARRIOR AID: Springfield Warrior Sports owner Andy Mariage says his business has received around $24,000 in Paycheck Protection Program loans at a time when he invested in a new building.

Banks, small biz benefiting from PPP money flow

Lenders expect loan funds will last through March 31 deadline

Posted online

After several months dormant, a popular coronavirus aid program for businesses has relaunched.

The U.S. Small Business Administration’s third round of Paycheck Protection Program COVID-19 relief funding opened Jan. 11. Nearly 2.2 million loans with a value of roughly $156.2 billion had been approved nationally through the end of February. Of that sum, over 56,000 loans valued at nearly $2.8 billion are in Missouri.

The program was restarted with $284 billion in new funds from a coronavirus aid bill enacted in December. It has a March 31 deadline to apply.

“There’s going to be plenty of money for this particular funding,” said Michael Barrerra, the recently appointed district director for SBA’s Kansas City district office that covers Springfield. “But we still encourage people to get your documents in as soon as you can.”

A two-week window started Feb. 24 in which the SBA is only accepting PPP loan applications from businesses or nonprofits with fewer than 20 employees. The move was made by the Biden administration to ensure larger firms don’t crowd out smaller companies from access to the coronavirus aid program, according to SBA officials.

The exclusive application period for small businesses and nonprofits includes new guidance that eliminates an exclusion prohibiting a business owner who is delinquent on student loans from participating in the program, Barrera said. Legal U.S. residents who are not citizens also have an opportunity to apply.

Getting aid
Springfield Warrior Sports owner Andy Mariage didn’t wait until late February to apply for this round of PPP funds. For his gym that offers an indoor obstacle course and training center, he completed paperwork in January for a $12,000 PPP loan. Mariage said he was approved by Mid-Missouri Bank and had the money in his business account within a week.

It was the second $12,000 PPP loan for Mariage, who also received one last April. Both were primarily used for Springfield Warrior Sports payroll, although some of the funds helped cover rent and utilities, he said.

“PPP was a huge help being able to maintain my staff,” he said of his five employees. “I didn’t have to let anybody go, and we maintained their pay throughout all the shutdown.”

Mariage said the stay-at-home order last spring forced a six-week closure. That was followed by another month without revenue as the company was in the process of moving to a 7,000-square-foot gym built on West Plainview Road.

“We were in the middle of a building project when (the pandemic) hit, so that didn’t help,” he said, noting revenue was down roughly 40% year-over-year. “We were shut down for almost a full quarter last year.”

Flowing loans
In the two rounds of PPP funding last year, Central Bank of the Ozarks approved over 1,260 loans totaling $111 million, according to past Springfield Business Journal reporting. Amy Unser, vice president of loan administration, said Central Bank’s PPP loan volume isn’t reaching last year’s levels. However, the bank is again active in the program, approving around 450 loans in southwest Missouri at a value of about $23.8 million, she said.

Roughly 200 of the bank’s PPP loans this year are in the $10,000-$50,000 range, Unser said.

“It’s been pretty steady. Obviously, we had a bigger rush right after when the program opened,” she said, noting this round has a $2 million individual loan cap. “It’s not been surprising. We kind of anticipated about this level. We’ll see if it picks up again before the deadline.”

Unser said this round of PPP loans approved by Central Bank is reaching small businesses, as only around 10% of them have gone to those employing 20 or more people.

“We’ve been able to serve those companies that only have a few employees or are sole proprietorships or farmers,” she said.

Scott Tennison, senior vice president and director of lending at Legacy Bank and Trust Co., said many more farmers are able to qualify after SBA loosened requirements. Farmers are now able to use gross income rather than net income required in prior rounds. That’s boosted the number of PPP applications coming into the bank’s branches in rural areas such as Clinton, Mountain Grove, Rogersville and Sparta, he said.

Legacy Bank has approved over 440 PPP loans at a value of $25.5 million since January, Tennison said. In the two rounds of last year’s program, it approved nearly 570 loans at a $70 million value.

“You won’t see the activity that you did at the beginning but you’re still going to see some flow in,” he said, noting the bank’s average PPP loan this round is $60,000.

Multiple beneficiaries
Businesses aren’t the only beneficiary of PPP, as the lenders receive fees from the SBA for each loan processed. For loans made this year, lenders are paid 50% or $2,500, whichever is less, for loans of up to $50,000, according to SBA data. The fee is 5% for loans of $50,001-$350,000 and 3% for loans of $350,001 and less than $2 million. In this round, the lender is paid a 1% fee for a $2 million loan.

The economic impact of the pandemic struck the banking industry hard in the first half of 2020, but it showed signs of a bounce back in the year’s fourth quarter. Full-year net income declined $84.9 billion, a drop of 36.5% from 2019, according to Federal Deposit Insurance Corp. data. However, fourth quarter net income totaled $59.9 billion – a 9% year-over-year increase.

Unser and Tennison both said the PPP fees have been a financial boost for the banking industry but declined to estimate the impact on their respective banks’ income.

“From a customer perspective, yes, it has helped fuel growth in the banking industry,” Unser said of PPP. “We were able to serve a large majority of the Springfield community.”

Tennison said the loan process for the coronavirus aid program has been beneficial for banks, as many may have gained new business clients as a result.

“You’re opening up those ancillary products out there for these small businesses to help them,” he said. “That can give us additional customers.”

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