Thousands of Montclarians kept on the payroll during pandemic thanks to PPP

BY JAIMIE JULIA WINTERS
winters@montclairlocal.news

Over 570 Montclair companies have received funds from the federal Paycheck Protection Program since April, helping keep about 6,120 employees on payrolls, according to the Small Business Administration.

The federal government, through the CARES Act, provided $659 billion — $17 billion in New Jersey — to banks, which offered businesses and nonprofit organizations the low-interest PPP loans in response to the economic downturn caused by the pandemic. In July, the SBA released the loan amounts and the names of the companies that borrowed more than $150,000.

“In releasing PPP loan data to the public, SBA is maintaining a balance between providing transparency to American taxpayers and protecting small businesses’ confidential business information, such as payroll and personally identifiable information,” the SBA said in a release. “Small businesses are the driving force of American economic stability and are essential to America’s economic rebound from the pandemic. SBA is committed to ensuring that any release of PPP loan data does not harm small businesses or their employees.”

PPP loans are not made by SBA, but rather by the lending institutions, with the loans then guaranteed by SBA. In Montclair, 78 lenders approved loans for local business owners and nonprofit directors. The borrowers self-certified that they were eligible for the loans as a small business. 

The loan amount is based on the borrowers’ average monthly payroll cost for 2019, with the borrower receiving two and a half times that amount. Borrowers who were assigned a loan prior to June 5 can take up to 24 weeks to spend the funds, instead of the original eight weeks.

Another key aspect of the PPP program is that businesses can apply for forgiveness of the loan, following passage of the Paycheck Protection Program Flexibility Act on June 4. 

To have their loans forgiven, businesses must meet certain criteria, including but not limited to spending at least 60 percent of the loan on payroll, maintaining at least 75 percent of the businesses’ total salary, and maintaining the same number of employees.

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if the business’s full-time head count declines, or if salaries and wages decrease.

The loans were deferred for six months, carry an interest rate of 1 percent, and have a maturity of two years, for those issued prior to June 5. For those issued after that date the maturity is five years.

THE BREAKDOWN

Of the 572 Montclair businesses that were approved, the vast majority, 480, applied for a loan of less than $150,000. Ninety-two organizations applied for loans ranging from $150,000 to $5 million.

Applicant businesses were sorted into seven categories: nonprofits, limited-liability corporations, corporations, partnerships, proprietorships, subchapter S corporations and professional associations. 

The 480 applicants for loans under $150,000 received a total of $23,820,232 for 2,687 employees. The average loan amount was $60,000, and these businesses employed between one and 55 employees.

Of the businesses that borrowed more than $150,000, 73 percent received between $150,000 and $350,000, 19 percent borrowed between $350,000 and $1 million, 1 percent applied for $1 million to $2 million, and 6.5 percent got $2 million to $5 million.

Some of the more well-known nonprofits in town that received loans included the Montclair Art Museum, Montclair Film, the Montclair Kimberley Academy, the Montclair Community Pre-K, Montclair Cooperative School, Congregation Shomrei Emunah, First Congregational Church, St. Luke’s Episcopal Church and Jazz House Kids. 

Among the prominent Montclair businesses that received funding were the Wellmont Theater,  Bangz Salon, O.A. Peterson Co., Ashenfelter, Trembulak, McDonough, Golia & Trevenen LLP, DeCamp Bus Lines and Grove Pharmacy. 

The number of employees averaged 39 per company. A complete list of loans above $150,000 will be available on the Montclair Local website.

Borrowers were asked, but not required to fill out, information on race and gender, with 90 percent of Montclair businesses not answering. Of the 10 percent that answered, 56 are male-owned, 32 are female-owned, 15 white-owned, one African American-owned, four Asian American-owned and two Hispanic-owned.

The SBA is working to collect more demographic information from borrowers to better understand which small businesses benefited from PPP loans. The loan forgiveness application requests demographic information for borrowers.

PPP loan data reflect the information borrowers provided to their lenders in applying for the loans. The SBA makes no representations about the accuracy or completeness of any information that borrowers provided to their lenders. And not all borrowers provided all information.

New Jersey ranked eighth in the nation in the amount of PPP funds received, with California getting the most at $67 billion. Texas received $40 billion and New York $38 billion.

Full list of Montclair businesses receiving over $150,000: