Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966

Paycheck Protection Program loans are once again available to local businesses through First National Bank of Alaska, which began accepting new applications on Friday, May 8. The Economic Injury Disaster Loan, the other main federally funded loan available to businesses impacted by COVID-19, remains elusive for Haines businesses.

The Paycheck Protection Program (PPP), under the umbrella of the U.S. Small Business Administration, is administered by local lenders like the First National Bank of Alaska. The loan offers eight weeks of funding to keep employees on payroll and help with other costs including rent and utilities. If a business adheres to these uses, the loan is forgiven. If not, it must be repaid in two years. The PPP received roughly $349 billion in funding from the federal government through the first round of CARES Act COVID-19 stimulus funding.

The Economic Injury Disaster Loan (EIDL) program is a disaster-response program that existed before the pandemic and received $10 billion in funding through the original CARES Act. It offers larger loans with terms of up to 30 years.

In April, the Small Business Administration put a temporary hold on EIDL and PPP applications while it waited for the U.S. Congress to approve more funding. On April 24, Congress approved a second round of CARES Act funding including an additional $50 billion for EIDL and $310 billion for PPP.

First National Bank of Alaska is now routing PPP applications for all its branches through a centralized system on a first-come, first-served basis. The bank did not respond to requests for comment about the number of applications it has received at its Haines branch. The bank stopped accepting applications in April due to an application backlog and insufficient federal funding for the PPP. The reopening has allowed a number of Haines businesses to apply.

Lutak Lumber owner Chip Lende said his business turned in its PPP application on Friday after the bank sent an email notifying business owners that it would begin accepting applications.

In general, PPP applications have been processed within a couple of weeks, once accepted by a local lender.

Chilkat Bakery and Restaurant owner Miki Atkins said she applied for both the PPP and EIDL after her business’ income evaporated as a result of statewide closures. January through March is always a slow time of year, and the statewide shutdown ground business to a halt. She said she decided she couldn’t close because she had ordered lots of food and needed to pay her bills.

“When I heard about the programs, I right away applied for them,” Atkins said. She received the PPP after roughly 10 days and is using it for payroll and utilities, but the EIDL is still pending.

The SBA announced that, beginning May 4, only agricultural businesses will be able to apply for the EIDL. Applications submitted by non-agricultural businesses prior to May 4 will be reviewed in the order they were submitted.

Even before the announcement, the EIDL was scarce among Alaska businesses. According to a Bloomberg article from April 22, at the time, Alaska had received 1 EIDL per 100,000 small businesses, the lowest ratio of any state. Most other states received between 2 and 26 EIDL per 10,000 businesses. SBA did not respond to requests for comment about the reason Alaska is an outlier.

“The EIDL is basically a unicorn—I have not heard of a single business in Haines that has received this,” Haines Chamber of Commerce executive director Tracey Harmon said. The chamber has been involved in efforts to connect local businesses with information about COVID-19 financial resources.

Seven of the eight Haines business owners interviewed by the CVN for this article had applied for EIDL. One owner said she had received a $1,000 “immediate assistance grant” through SBA. At the time of publication, none had received an Economic Injury Disaster Loan. All who applied said their applications were pending. Many had applied over a month ago.

Rhonda Hinson, owners of Alaska Rod’s, said her business applied for the EIDL at the beginning of April. In late April, she called the SBA to follow up. She said they told her to wait for an email with portal access and information about next steps. A week later, she received an email saying her application was being processed and she would soon receive an email granting her portal access. As of Monday, May 11, she said she had yet to receive the email.

“Everyone I know that has been trying to participate in these (federal loan) programs has found it to be very frustrating. Everything is very slow and the hoops are challenging,” Hinson said.

For seasonal businesses in Haines, the PPP is a good short-term solution, but less useful for businesses searching for a way to survive until summer 2021.

“I see (the PPP) as a Band-Aid and a nice program to keep some people working, but we’re holding out for the EIDL program,” Joe Ordonez said. “I can live off (the EIDL) and come back next summer to make the payments.”

Sockeye Cycle owner Dustin Craney said he estimates the business has seen 80-90% of its pre-bookings cancelled in the past two months. His business received a PPP loan through First National Bank. The EIDL, which he applied for on April 8, is still pending.

“If the EIDL doesn’t come through, we will probably need to slim down more than we’d like over the winter and live off savings to make it through to the next year,” Craney said.

Alaska Mountain Guides owner Sean Gaffney, whose EIDL application is also pending, said he, along with others in the community including the Mayor, executive directors of both the Haines Chamber of Commerce and the Haines Economic Development Corporation, the borough manager and several assembly members, have reached out to Alaska’s federal delegation to let them know that the EIDL is better for seasonal businesses that will likely not be able to generate revenue this summer, translating to a year’s worth of lost income.

Revisions to the PPP made it a slightly better deal for seasonal businesses than the original version. The PPP now allows loan amounts to be calculated based on last year’s hiring numbers instead of this year’s.

Hinson applied under the new guidelines after banks began accepting applications once again.

Gaffney said he originally applied for the PPP under the old version, then reapplied once the calculation formula changed for seasonal businesses. His business’ new PPP application is pending.

Additional funding for businesses will soon be available through the state. On Monday, May 11, the Alaska Legislature approved $290 million in grants for small businesses using a portion of Alaska’s CARES Act funding.