PPP loans have provided more than $ 256 million to businesses in the region | Local news

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St. Peter CPA Marie Dranttel knows more than most about how to navigate the federal payroll protection program that provided loans to companies under the CARES Act.

The $ 659 billion funding was aimed at providing funds to keep employees on payroll and for a few other qualifying expenses. Businesses can get the loans waived after proving that they have used them on qualifying expenses.

Drantell received a $ 23,400 PPP loan to pay for its employees.

“It helped. It paid wages. That’s what it was there for and I used it,” said Drantell, who is also a Nicollet County commissioner. “It was a great help to businesses early on (in the pandemic).”

There were 1,945 PPP loans totaling $ 256.4 million in that region. The data tracks loans by zip code.

Mankato’s zip codes had the most borrowings at 795, for a total of $ 144 million. North Mankato had 215 loans totaling $ 29.1 million.

Drantell’s loan was in the low range of corporate payments. Some received thousands of dollars while some companies qualified for millions. The loan amounts were based on the number of employees and labor costs.

Mankato Clinic and Bolton & Menk in Mankato each received the maximum credit of $ 10 million, as did AMPI in New Ulm.

Le Sueur Inc. received $ 3.9 million, LW Management in North Mankato received $ 3.5 million, and I&S Group in Mankato received nearly $ 3.4 million.

Martin Luther College received nearly $ 2.4 million and St. Peter Community Hospital received more than $ 1.5 million.

The Heritage Development Group in Waseca raised more than $ 1.2 million.

The new credit data was released earlier this month by the Small Business Administration. The information includes company names, addresses and the exact loan amounts. That’s far more information than an initial July release that only contained ranges of credit values ​​and no information about individual companies that received less than $ 150,000.

The agency was forced to release the more detailed information after a protracted legal battle in which news organizations sued the SBA.

Banks busy

David Krause, CEO of Pioneer Bank, said employees in his bank’s branches have guided more than 700 companies through the loan application process. The bank serviced over $ 60 million in loans to businesses in the area and others across the state.

“We believe it affected 7,000-10,000 jobs in our region, so it was definitely a valuable program. It was one of the government’s best programs in my opinion, aside from the obvious cost. “

In the area, PPP loans have been made to a wide variety of businesses including nail salons, a youth baseball group, law firms, restaurants and bars, dentists, farmers, churches, health clubs, manufacturers, financial planners, real estate companies, and more.

The banks were granted a 5% fee for processing the loans under the PPP terms.

Shane Van Engen, president of Bremer Bank’s Mankato Market, said his local branch had issued approximately $ 50 million in PPP loans. “Our goal is to foster a vibrant local community, so we wanted to strengthen ourselves and help our customers,” he said.

Krause said his staff worked quickly to understand the details of the huge program. “I remember the first weekend it came out. I am fortunate that my involvement with the Minnesota Bankers Association has built a good network of bankers across the state.

He said the normal SBA system for handling such programs was initially not robust enough to handle all incoming loans. “The demand was great. It was pretty rocky in the first few weeks. “

Krause said Pioneer’s ability to quickly navigate the lending process helped them attract some new customers.

“In our case, 27% of the loans we made had their primary banking relationship with someone else. We got calls from all over the state because their bank was busy or didn’t understand what was going on. We were able to build up some new relationships, so I’m very proud of our team, ”said Krause.

Ask for forgiveness

Companies, banks and accountants are now trying to get the PPP loans waived. The banks that processed the loans are now providing their customers’ records showing that the loans were used for qualified purposes so that the companies do not have to repay them.

“You have a form to fill out and receipts,” said Krause of the award process. “We have already made over 100 requests for forgiveness and are doing more every day.”

Dranttel said the process is pretty straightforward for most companies that have received credit.

“If you can document what you’ve used it for, it’s taken. For under $ 50,000 (loans) it seems pretty easy, but over $ 50,000 I’ve seen a few and it looks brutal. “

She said the process was being delayed by staff shortages at agencies, including the IRS, due to COVID.

For businesses that have used part or all of the loan on out-of-the-question items, the funds received become a low-interest loan that they must repay.

Krause said he heard from customers receiving calls from across the country claiming they could help extend the loans. He said he advises people to reach out to the bankers who originally processed the loans to cancel them to prevent unscrupulous callers from taking advantage of them.

Tax problems arise

Those who received the forgivable loans assumed they would be tax-free. But recent guidance from the IRS has messed things up.

The IRS said that if companies use the money on expenses like payroll and then the loans are waived, companies won’t be able to deduct payrolls and some other expenses from their taxes as they normally do.

“We’re up in the air doing a lot of what-ifs,” Drantell said of clients she works with. “The CARES law changes so often. If I had hundreds of thousands (of dollars in credit) I would be worried. “

Krause said the IRS guidance came as a shock to businesses. “It was clearly not supposed to be a chargeable event when the CARES bill was passed, but now we have to tell the IRS that it will be if you are waived the loan.”

Drantell and Krause said they hope and believe that Congress will act to remove the tax implications if they pass another pandemic relief bill that is under negotiation.

While it believes the tax implications will be removed in the upcoming bill, Drantell expects a multitude of tax increases in the next year or two due to trillions of dollars in deficit spending at the federal level and in states facing budget constraints will be planned.

“The government is going to need some money pretty soon, and the only way to do it is by collecting taxes. Printing money no longer works. “

Legislators were looking for PPP

According to The Star Tribune, more than three dozen Minnesota companies owned or affiliated with state and state legislatures received millions in federal aid during the COVID-19 pandemic.

These legislators had the same opportunity as any other company to apply for federal funding.

Companies affiliated with Sen. Nick Frentz, DFL-North Mankato, received more than $ 400,000 in pandemic aid. A law firm in Mankato of which Frentz is a partner received $ 323,200 and its tandem bagels received a loan of $ 97,749.

In a statement to the Star Tribune, Frentz said he was not involved in the law firm’s ongoing financial management, partly because of his time commitment in the Senate.

“I was of course aware that the company applied for and received a PPP loan and that we were using the loan proceeds for PPP purposes,” said Frentz.

Other recipients include a Duluth hockey company owned by Republican MP Pete Stauber and the Washington, DC-based policy advisory firm owned by Democratic MP Ilhan Omar’s husband.

Minnesota Senate Majority Leader Paul Gazelka, R-East Gull Lake, received discharge on behalf of his Baxter insurance agency. Rep. John Lesch, a St. Paul Democrat, used grants to run payroll at his St. Paul law firm.

Natalie Rademacher compiled and analyzed the data for this story.

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