Business relief loans help local companies
Dozens of local businesses hurt by the COVID-19 emergency have benefited — or soon will benefit — from short-term loan programs established by Norton and Wise County.
Meanwhile, there has been frustration with several aspects of the federal Paycheck Protection Program loan initiative, which last week got a new infusion of cash that nearly doubled the total funding initially approved by Congress.
In early April, Norton City Council authorized the Norton Strong loan program, which offers small businesses a loan up to $5,000 at zero interest, with no payments due for six months. After six months, the balance could be paid in full or repaid in monthly installments for up to 54 months.
The city’s Rural Business Enterprise Grant Program loaned $310,000 to the Norton Industrial Development Authority to create the relief package. Added to the pot was $5,000 from the Lenowisco Planning District Commission and $40,000 from the Virginia Coalfield Economic Development Authority, for a total of $355,000.
As of Sunday, the program had approved 39 loans totaling $192,500 for Norton businesses, according to City Manager Fred Ramey. He hoped to close at least five more loans this week.
“I do believe that all of this funding is truly making a difference for our small businesses,” Ramey wrote in an email. “I believe that because a number of those have told me that over the past two weeks as I have worked with the businesses.”
For more information, contact the city at 679-1160 or go to www.nortonva.gov, click on the “Doing Business” link, then find the link on the left side of the page labeled “COVID-19 Small Business Assistance Program.”
The Wise County IDA has $255,000 available for loans with similar terms, County Administrator Mike Hatfield wrote in a Monday email: $150,000 of county funds, $100,000 from VCEDA and $5,000 from Lenowisco.
“We have had approximately 30 applications to date,” he wrote. “They are being evaluated and money should be available this week.”
For more information, contact the IDA at 328-2321.
The federal government’s virus-related economic relief package included an initial $349 billion infusion for the Paycheck Protection Program, which is intended to help businesses keep employees on the payroll and meet other short-term costs until operating conditions return to something approaching normalcy.
The program’s first round has faced intense criticism over loan terms that allowed giant banks and other giant firms to obtain extremely cheap debt, while leaving smaller and vastly more financially fragile businesses in the cold.
Also, the initial funding ran out much quicker than federal officials expected.
When asked about the local effect, Powell Valley National Bank chief executive Leton Harding explained April 21 that the bank had received 302 PPP loan applications and got 287 of them approved “before the pipeline was shut down.”
PVNB received PPP funding of $21.5 million and had approved loans for $18.7 million as of April 21, he noted. Harding expected the remaining funds to be distributed no later than April 29.
Of the bank’s PPP loans, 106 were for $25,000 or less; 70 were for $50,000 or less; 37 were for less than $100,000; and 55 were for more than $100,000.
The Virginia Bankers Association reported April 17 that as of the previous day, Virginia banks had processed nearly 40,400 PPP loan applications for more than $8.7 billion. When the initial $349 billion for PPP loans ran out, there were an estimated 22,700-plus Virginia small businesses that had submitted applications but had not yet received federal Small Business Administration approval. They sought nearly $3.24 billion in loans.
The newly approved funding package adds $310 billion nationwide for PPP loans. Of that, $30 billion will be set aside for processing by financial institutions with assets of less than $10 billion. Another $30 billion will be set aside for institutions with assets between $10-50 billion.
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