Second wave of PPP loans on the way

For Jules and Lillian Lieb, mother-daughter co-owners of the Morning Glory Farm Fresh Café, the wait has been excruciating. Now they’re glad it’s nearly over.

An extension of last spring’s Paycheck Protection Program was part of the $900 billion coronavirus relief and stimulus package signed after Christmas by President Donald Trump. It will offer around $284 billion in forgivable, federally backed loans for small businesses impacted by restrictions related to the COVID-19 pandemic.

For the Liebs, the help can’t come soon enough.

“The PPP loan we got last spring was amazing,” Lillian Lieb said. “It required 75% to go to payroll, and ours was close to 80. Most of the rest went to pay vendors. The loan is forgivable if you do it based on their parameters, and we followed all the parameters to the letter.”

The Liebs applied for the loan through Longmont-based High Plains Bank. “They’re real people and not bank people,” Lillian Lieb said. “They care about us.”

However, their funds from the loan ran out in June or July, she said.

This time, she added, “we are going to reapply as soon as it’s available so we can keep people employed and on staff.”

Morning Glory had 32 employees before the pandemic triggered shutdowns, bans on indoor dining, capacity limits, mandatory masks and social distancing. “We’re now down to 12,” Lieb said, “but now hopefully I won’t have to let anyone else go.”

After the state-ordered closure on March 16, she said, “I almost emptied the savings account to pay my staff. Then we opened for carryouts, but you just can’t make the same money being open a third of the hours.”

Was permanent closure a possibility if the new round of PPP loans hadn’t been approved by Congress and eventually signed by Trump?

“I didn’t want to entertain the idea,” Lieb said. “I would hope that we weren’t super close, but it felt dangerous. I haven’t personally been paid for several weeks. We have a very loyal clientele, and I appreciate what they’ve done for us, but business has been about a 10th of normal. We had to close Mondays and Tuesdays just to concentrate payroll.”

Banks are ready to get the program rolling again, said Joe Smith, vice president for commercial lending at Salida-based High Country Bank. “We’re gearing up to start it again whenever we get the word.”

“We’re still waiting for final approval,” said Lisa Hamilton, the bank’s Longmont branch president. The oldest financial institution in the state, High Country opened its Longmont location in November.

“I anticipate most people in Longmont will go back to the same bank they used last time,” Smith said, “but I’ve got Drew Ballingham there; he’s a full-time commercial loan officer.”

The newly signed measure introduces loan eligibility for some nonprofits and adds $15 billion to aid cultural institutions, live entertainment venues and independent movie theaters, and $20 million for the Economic Injury Disaster Loan program.

The EIDL program, available to nonprofits, businesses and independent contractors, offers low-interest loans of up to $2 million, and the CARES Act includes a loan advance on EIDLs of up to $10,000. The Small Business Administration disaster-loan program aids people affected by natural disasters in the United States.

For the PPP, Smith said, “Loan limits have been reduced from 10 million to 2 million. We didn’t have anybody close to those thresholds. I think the largest one we did was a half million.”

The “need” qualifications have been improved, he said, and “hospitality will get more money than everybody else — 3 1/2 times average payroll from 2019 or for the 12 months prior, versus 2 1/2 times.

The measure includes a clarification providing for the deductibility of business expenses paid with forgiven PPP loans. “PPP money is not taxable income. Deductions can be used,” Smith said. “All your payroll expenses can be deducted as usual, and all other eligible deductions. Some call that a double-dip, but they’re allowing you to do it.”

Smith advised those seeking PPP loans to “get your paperwork organized and in order — 2019, 2020, everything. Track your expenses and payroll throughout the period so when forgiveness comes around, it’s an easier process.”

Lots of folks were “scrambling to understand it before,” Smith said. This time, he added, “try to read the nuances and changes — and know the risk if you’re not telling the truth.”

The truth for Lillian Lieb is that she and her mother need the new loans for Morning Glory to continue to bloom.

“I won’t make any assumptions until the money’s in my account,” she said. “We just want to survive until this darned pandemic’s over.”