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As businesses turn to a federal relief program, questions stand between paychecks

A view of Liberty Street in downtown Salem on Thursday, April 2. (Amanda Loman/Salem Reporter)

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Salem-area businesses are lining up for a new federal relief program that’s intended to keep companies afloat and paychecks flowing. But the swiftly enacted program is surrounded with questions and it’s not clear when businesses will see any money.

The Paycheck Protection Program is part of the $2 trillion relief program passed by Congress in response to the economic damage caused by the COVID-19 outbreak. The program provides low-interest loans to businesses that won’t have to be repaid if the borrower keeps employees on the payroll for eight weeks and the money is used for payroll, rent, mortgage interests or utilities.

The program is administered by the federal Small Business Association and private banks make the loans. Friday, April 3, was the first day banks could start taking loan applications. But the federal guidelines for banks were issued the day before and reports have emerged of the program’s rocky rollout.

“Frankly, there are going to be more questions than answers to start with,” said Congressman Kurt Schrader, a Democrat who represents the Salem area, on a webinar on Monday.

During that Small Business Administration webinar, officials from the administration spent an hour fielding questions such as how to calculate employees who work off tips or commissions and if it applies to businesses with multiple commercial properties.

Jim Vu, treasurer of the Salem Mainstreet Association, said that the program has the potential to help businesses but there are lots of unknowns concerning the federal guidelines given to banks.

He said a key question is whether the program uses an employer’s previous tax returns or 2020 payroll to determine its number of employees. He said that some companies expanded their payroll during 2020 and that the difference between the two methods of counting employees could leave some businesses on the hook for repaying a large portion of their loan.

“We’ve just never had a program launch this quickly from the government,” said Vu.

Kathy Gordon, a certified public accountant with Aldrich CPAs + Advisors LLP in Salem, said she’s been busy getting clients payroll data and other information for their applications. Gordon, also president-elect of the Salem Area Chamber of Commerce, said that the application process has been straightforward and that applications began flooding in on Friday. 

Because the program has only $349 billion allocated, Gordon said businesses should get their applications in soon begin talking with their banker.

She said smaller banks have been more willing to accept applications than larger banks.

On Sunday, Wells Fargo issued a statement that it wouldn’t be participating in the program because of regulatory issues. U.S. Bank issued a statement last week that it planned to begin accepting applications online Friday afternoon.

Willamette Valley Bank and Pioneer Trust declined to comment, citing the hefty workload from the new program. Umpqua Bank and Maps Credit Union didn’t respond to a request for comment. The lenders don’t appear to have posted information to their websites about the program, except for Umqua Bank for which indicated that it’s not accepting applications for the program because of unprecedented demand.

During the Small Business Administration webinar, Martin Golden, district director for the administration, said it’s not clear which banks will participate and if they’ll make loans to non-customers. He said that if one business couldn’t get a loan at a large bank they should go across the street to try another.

“It’s just going to be a little bit dialing for dollars,” he said.

Update: This article has been updated that Umpqua Bank has posted information on its website.

Contact reporter Jake Thomas at 503-575-1251 or [email protected] or @jakethomas2009.