Emergency paycheck loan program delivers $5 billion to 53,000 Kansas businesses

TOPEKA — Chevrolet dealer Jeff Longbine understood the economic damage to sales from the COVID-19 pandemic and the potential benefit of an emergency federal loan program fashioned to sustain small businesses and prevent employee layoffs.

He applied for and received $336,000 under the Paycheck Protection Program, which is the $669 billion nationwide initiative created through the U.S. Small Business Administration to deliver stopgap funding for payroll, rent, interest and utilities. A big chunk of PPP loans as large as $10 million went to manufacturing, construction, health businesses and the restaurant and hotel industries.

“What that represents is two-and-a-half months payroll,” said Longbine, who operates Longbine Auto Plaza and represents Emporia in the Kansas Senate. “It did keep our 37 employees employed.”

By the end of July, the Paycheck Protection Program had delivered $5.01 billion in loans to 53,700 business applicants in Kansas.

Who received large PPP loans in Kansas?

Economists credit the PPP strategy for helping prevent the U.S. job market meltdown from being worse as coronavirus swept the nation.

In Kansas, through June, three dozen companies borrowed $5 million to $10 million through PPP. More than 300 employers in the state received $2 million to $5 million, while 500 businesses took in $1 million to $2 million. Nearly 5,000 companies had PPP loans of $150,000 to $1 million. The bulk of recipients in Kansas, more than 46,000, accepted loans of less than $150,000.

The roster of the businesses drawing significantly from PPP in Kansas include Heritage Tractor in Baldwin City, Sunflower Electric Power Corp. of Hays, American Institute of Baking in Manhattan, Church of the Resurrection in Leawood, Syracuse Dairy, Crossland Heavy Contractors of Columbus, Laird Noller Ford of Topeka, Mid-America Nazarene University in Olathe, Murfin Drilling Company of Wichita, Foulston Siefkin law firm in Wichita, Payless ShoeSource of Lawrence, and Coffey County Hospital in Burlington.

The $1 million to $2 million club included the Archdiocese of Kansas City, Kan., Golden Eagle Casino in Holton, Kansas Ethanol of Lyons, Planned Parenthood of the Great Plains in Overland Park, Southwestern College in Winfield, Poky Feeders of Scott City and Logan County Hospital in Oakley.

“The hospital here had to close its physical therapy and surgery. It kind of kept the doors open,” said Zachry Broeckelman, senior vice president at Farmers State Bank, which issued the PPP loan to the hospital.

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The Kansas State University Alumni Association took out a PPP loan of $606,000, while the University of Kansas Alumni Association was recipient of $410,000 from the program.

Terin Walters, who works in communications at the Kansas State alumni association, said the organization suffered an abrupt and unexpected loss of critical revenue streams as the pandemic took hold. This financial uncertainty prompted the organization’s pursuit of a PPP loan to shield 34 employees and continue support of the university, she said.

Heath Peterson, president of the KU alumni organization, said the federal loan aid helped preserve jobs of 51 employees. He said the association struggled with disruption, cancellation or postponement of membership solicitations, annual fundraising activities and revenue generated through an alumni travel program and alumni center rental reservations.

“I’m actually more concerned about the long term than the short term,” he said.

The Small Business Administration estimated the federal loans flowing into Kansas accounted for preservation of 521,000 jobs across the state at the end of June.

Alan Cobb, president and chief executive officer of the Kansas Chamber of Commerce, said PPP did what it was intended to achieve and the federal government ought to consider an additional round of loan assistance.

“It helped many Kansas businesses bridge their revenue gaps and kept their staffs employed,” he said. “The state’s business community wants to continue to keep Kansans employed. There are remaining questions about loan forgiveness as well as serious concerns about the program’s reported fraud and the country taking on more debt, however, having another round is an option to which businesses should have access.”

Cobb said it was imperative for government officials at the local, state and federal levels to do everything possible to keep the economy open so people could buy and sell products and services. He said the country required a growing and thriving economy to account for the unprecedented federal investment into the economy by agreement of Congress and President Donald Trump.

The first phase of PPP extended to qualifying U.S. businesses $349 billion, an amount that evaporated in days. An additional $320 billion for PPP was approved in April. The application deadline for these loans was extended until Saturday, Aug. 8.

The SBA said Kansas’ neighboring state of Missouri recorded 93,000 loans valued at $9.15 billion, while Oklahoma had 65,000 loans of $5.45 billion and Nebraska processed 43,000 loans for $3.43 billion. Colorado topped the five-state region with 107,000 loans worth $10.35 billion.

Under provisions of the federal law, PPP was made available to certain businesses, self-employed workers, sole proprietors, certain nonprofit organizations and tribal businesses. PPP provided low-interest private loans to pay for payroll expenses and other costs. The loans may be fully or partially forgiven if the business keeps its employee base and wages stable.

Negotiations with the White House, Senate Republicans and House Democrats on another pandemic relief bill haven’t produced a deal.

U.S. Rep. Sharice Davids, a Kansas Democrat, said the Small Business Administration should embrace a greater degree of transparency in management of COVID-19 disaster funding and investigation of potential fraud. Some businesses have been unfairly squeezed out of opportunities to be part of this essential lifeline, she said.

“That makes reports of loans going to ineligible businesses and some getting duplicated all the more alarming and unacceptable,” Davids said.