Region’s PPP loan recipients grateful
Businesses say federal relief from shutdown has saved livelihoods
The millions of dollars in Paycheck Protection Program loans received by Spectacle Gary and Majestic Star Casino saved about 600 jobs, according to General Manager Jahnae Erpenbach.
Peter Kaiafas, owner/manager of Avalon Manor in Hobart, said the $150,000 to $350,000 PPP loan he received helped him pay some of his employees who would otherwise have had to file for unemployment.
The two businesses were among hundreds of businesses and nonprofits in the Region that received federal aid in the form of a low-interest, or possibly forgivable, loan to help them survive and keep some of their employees working during the COVID-19 pandemic — a boost that some Region business experts say helped the area’s economy in an uncertain time.
“I would say it was a huge help. In many cases the PPP loan was a savior to businesses, especially those industries that were completely shut down. It was enough money to pay their rent and employees. On the employee side, they might have been laid off without the loan,” Erica Dombey, president and executive director of Regional Development Company in Valparaiso, which specializes in business lending, said.
Erpenbach said recent legislation providing extended loan forgiveness was especially beneficial to Spectacle Gary and Majestic Star Casino, given the government-mandated closure of Indiana casinos and the unknown timeline to reopen.
“At the end of the day, the PPP loan, as well as the legislation on extended loan forgiveness, saved approximately 600 jobs,” she said.
Congress allocated about $670 billion via several acts President Donald Trump signed into law, said Laura Schafsnitz, a spokeswoman for the SBA’s Indiana office. She said about $130 billion remained available as of June 30 and the program remains open for applications through Aug. 8.
The PPP loans have an interest rate of 1%, but will be totally forgiven if at least 60% of the money is used for payroll, with the remainder used to pay interest on mortgages or rent and utility costs.
To be eligible, the business or nonprofit must have less than 500 employees per location or meet an SBA industry size standard if the number of employees exceeds 500, according to the SBA.
Recipients in the Region were widespread and included candy makers, manufacturers, construction companies and contractors, restaurants, healthcare groups, car dealerships, funeral homes, veterinary clinics, retailers and private schools.
Eleven Northwest Indiana business received the highest allocation, between $5 million and $10 million, including Majestic Star Casino in Gary, Albanese Confectionery in Hobart, Urschel Laboratories in Chesterton and Southlake Community Mental Health Center in Merrillville. Majestic Star was also listed as receiving another $1 million to $2 million.
Several Hammond companies, including Al Warren Oil, Altom Transport and American Stair, were among those companies receiving between $2 million and $5 million.
Those receiving between $350,000 and $1 million included Andrean High School and Bishop Noll Institute, Lakes of Four Seasons Property Owners Association, Gary Jet Center and Alberts Jewelers in Schererville.
At the lowest end, between $150,000 to $350,000, recipients include Avalon Manor, Benefit Trucking in Gary, Burns Funeral Home in Crown Point and Coastal Valley Water in Valparaiso.
Altogether, 11,853 businesses and nonprofits in Indiana received loans ranging from $150,000 to $10 million, according to a list of recipients supplied by the U.S. Small Business Administration.
Anthony Sindone, clinical assistant professor of finance and economic development at Purdue University Northwest, said it’s unknown what the local economy would look like today if companies hadn’t received the federal aid.
But he added, “If the money was used for the right reason, payroll support, many many employees didn’t see a drop in income.”
Kaiafas, of Avalon Manor, said the loan helped him keep some of his staff, to some degree, which helped them stimulate the local economy by being able to spend that money on groceries and other items.
Kaiafas said he had to close his doors for about 10 weeks, causing him to lose out on numerous banquets. Paul Mullaney, president of Bishop Noll Institute in Hammond, said the PPP loan enabled the private school to help make payroll.
Other nonprofits receiving the loans included Operation Enterprises in Valparaiso and Boys and Girls Clubs of Portage.
Linda Woloshansky, president and CEO of Workforce Innovations, said nonprofits are also businesses.
“A lot of them saw declines in their contributions, yet they still need to deliver services,” she said.
She said a lot of the organizations had to retool to reopen, noting schools switched to virtual learning.
Will one loan be enough?
Woloshansky said while the PPP loans helped a lot of companies stay in business and kept them from having to lay off all their employees, there could be more layoffs around the corner.
“The attitude of Northwest Indiana businesses is to hold on as long as possible. We saw that in 200809. Our unemployment rate was lower than other regions in the state. But as other regions brought people back, we started to show an increase in unemployment,” she said.
Dombey said some businesses will take longer to fully come back, such as restaurants, tourism and others in the hospitality industry and those related to the steel industry.
“It will be a slow lift, but was a very fast downturn,” she said. Dombey said construction could also see a continued slump. “There’s been a lot of talk that construction will have a U-shaped recovery instead of a V-shaped recovery. We’ll see construction slow significantly in the fall and will take a while to come back,” said Dombey, who deals with a number of construction companies.
Sindone said he suspects that some businesses can’t continue to keep all of their employees on, even with the loan, if they can’t return to full capacity.
“Businesses can say, this helps for eight weeks, then I need to lay people off, especially in the hospitality industry,” Sindone said.
What if the number of coronavirus cases spikes again, as is happening in several states that reopened more quickly than Indiana?
“If I had to close down again, it could be difficult, then I would probably need a second loan,” Kaiafas said.