As many as one in three jobs in Dayton have been supported by the federal Paycheck Protection Program, according to a city analysis, which supporters say shows the program is a critical lifeline that has prevented many local workers from losing their jobs.
The program, which provides loans to employers to retain their payrolls during this crisis, has a new round of financial aid available, and lenders already have approved tens of thousands of new loans for existing and first-time borrowers in Ohio.
“Economic shutdown from COVID-19 has had a significant impact on businesses everywhere, including Dayton,” said Chris Kershner, president and CEO of the Dayton Area Chamber of Commerce. “Without the support of PPP, some of these businesses would have had to slash spending and reduce jobs.”
Hundreds of businesses, proprietors, nonprofits and other employers in Dayton have been approved for payroll retention loans this year, worth millions of dollars, according to U.S. Small Business Administration data.
The Paycheck Protection Program helped retain as many as 35,562 jobs in Dayton, according to the city of Dayton’s analysis of U.S. Treasury data.
Less than half the jobs (16,816) were retained by employers that received loans of $150,000 or more, the city said. The remaining jobs (53%) were retained by employers whose loan awards were less than $150,000.
However, the job retention estimate may be overstated, because loan data for recipients receiving less than $150,000 did not contain business addresses. This means some businesses may list Dayton as their home when really they are located outside of city limits, in suburban communities.
More than 3,250 companies, organizations, nonprofits, sole proprietors and other entities in Dayton last year received Paycheck Protection Program loans under $150,000, worth a combined $121.4 million, according to data analyzed by this newspaper from the U.S. Small Business Administration.
“The payroll protection program was very important in protecting jobs,” said Diane Shannon, Dayton’s director of procurement, management and budget.
Shannon said other stimulus programs, like the direct payments to Ohioans, also have helped keep the local economy afloat, and the city is monitoring jobs data closely, because so many positions are being supported by federal fiscal programs.
She said this makes the city financially “vulnerable” moving forward.
Nearly three-fourths of the city’s general fund revenue comes from income taxes, which declined 3.2% in the last three quarters of 2020, city data show.
Dayton’s income tax collections took about four years to recover from the mild recession of 2001, Shannon said, and it took revenues 11 years to return to their pre-downturn peak, following the Great Recession.
There’s no way to know for sure how long it will take for the city’s collections to bounce back to pre-pandemic levels, but additional layoffs and the expiration of federal stimulus programs would have a negative impact.
The Paycheck Protection Program launched in April of last year and was part of the federal CARES Act passed by Congress to provide economic relief to small businesses during the pandemic, said Andrea Roebker, the regional communications director for the U.S. Small Business Administration for Region V, which includes Ohio.
The program provides forgivable loans to small businesses and other eligible applicants to keep employees on their payrolls and help them sustain and “retool” their operations, she said. Last year, the program offered up to $659 billion for job retention and other expenses.
The program gives small businesses funds to pay up to eight weeks of payroll costs, including benefits, and the money also can be used to pay interest on mortgages, rent and utilities.
The 2021 Paycheck Protection Program was approved in December and the application process began last month and will remain open through March 31, or until funding runs out, Roebker said.
The program has nearly $285 billion available, but already about 1.3 million loans have been approved nationwide, totaling nearly $101 billion.
Lenders have approved 36,523 loans for Ohio employers, worth a combined $1.5 billion, according to the U.S. Small Business Administration.
The loans are generally 2.5 times employers’ average monthly payroll, up to $10 million under last year’s program and up to $2 million this year, said Ray Graves, a lender relations specialist with the Small Business Administration’s Cleveland office.
Borrowers can choose a “covered period” between 8 and 24 weeks for the loan, the administration said, and they are eligible for forgiveness if they use at least 60% of the loan for payroll costs and the rest on other allowable expenses.
Leisure and hospitality businesses, including restaurants and bars, were especially hard-hit by the coronavirus crisis, and many local restaurants received loans from last year’s funding rounds.
Most restaurants are still operating at 60% or less of their normal capacity, and about one in five operators believe they will have to close within six months at current capacity, said Homa Lily Moheimani, media and communications manager with the Ohio Restaurant Association.
Additionally, about 14% of operators surveyed say they will have to close within three months at current operating levels, she said.
The Paycheck Protection Program is a top source of funding aid for restaurant operators, she said, many of whom regularly reach out to the restaurant association with questions about the program and how to apply.
The loans allow restaurants to hang onto their workforces, preserving important relationships with their employees, some of which date back decades, she said.
“Employers ― operators ― see these people as their family,” she said. “When they get help to keep their establishments open, they are keeping those relationships.”
Nationwide, more than 70% of the loans approved this year were for “second draws,” meaning hard-hit small businesses that received loans last year needed additional assistance to keep employees on their payrolls and their operations going, the administration said.
Last year, multiple local business owners who received loans told this newspaper that the program was a jobs-saver.
“Since we serve the food service, retail, gaming, entertainment and retail banking industries, the loan was critical to help us minimize job loss until we return to normal,” said Chris Riegel, chief executive and founder of Stratacache, a technology company based in downtown Dayton.
Dayton-area employers want to take care of their people and are eager to get back to normal business operations, but this once-in-a-century pandemic has crushed the economy, which means “it’s all hands on deck to ensure economic sustainability,” said Kershner, with the Dayton Area Chamber of Commerce.
Kershner said it’s important that local businesses’ loans are forgiven, because they will have a hard time recovering if they are saddled with debt.
U.S. Rep. Mike Turner, R-Dayton, said he voted to create the Paycheck Protection Program and his office has worked diligently to help small business owners secure funding to keep their doors open and their employees on the payroll.
“I am encouraged to hear that PPP loans remain a true lifeline to our business community in Dayton,” he said.
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