Tuesday, May 11, 2021

PPP Changes Open Door for More Businesses

 Llewellyn Jones authored this article for the Mississippi Center for Investigative Reporting. It is reprinted with MCIR's permission.

The federal Paycheck Protection Program has provided life support to Mississippi rural hospitals facing bankruptcy and closure.

It has kept the lights on for the state’s rural electric utilities and boosted the prospects for expanding broadband access in a state that ranks at the bottom for connectivity.

And now, it may help sole proprietors from Gulf Coast fishermen to Delta farmers stay in business whose loan applications from this sector are outpacing the national average by 27%.

Initial restrictions held back the potential benefits to Mississippi businesses when it was passed with bipartisan congressional support.  Those restrictions were removed as the nation went into a freefall from the coronavirus pandemic.

“If the intent of the program was to blunt an economic cliff caused by continuously growing unemployment, it did that,“ said Gordon Fellows, president of the Mississippi Bankers Association. “The SBA (Small Business Administration) had to build the plane while we were all flying in it in the middle of a crisis unlike anything any of us had ever experienced.“

The program was particularly successful in Mississippi with over $4.1 billion approved so far according to SBA data collected from lenders. Mississippi saved jobs with the least amount of money on average. It also ranks in the top 10 for the number of loans handed out relative to the number of small businesses in the state, and there's been little evidence of fraud or waste. 

 

According to Fellows, it was also a success of the state‘s banking system. “Many people don‘t think of Mississippi as a financial hub, but in a way we are.  The Mississippi banking sector punches above the economic weight of our state.“


Sole Proprietors

Many of the loans Mississippi banks handed out were low dollar amounts and the state had one of the lowest average loan amounts nationwide. That trend is associated with smaller businesses and sole proprietors: self-employed individuals like truck drivers, farmers, and fishermen that might file a 1099 Schedule C with the IRS.

Originally the PPP program based the total amount that a sole proprietor could qualify for based on their net profit, which for some might not be much and make it not worth applying for. That has since been amended with the program's renewal in 2021 so that businesses can apply based on their total revenue rather than total profit.

That change is expected to open the floodgates for many more sole proprietors, of which Mississippi has plenty.

According to Fellows, sole proprietors are now applying in force, with more coming from rural parts of the state. “Since those recent changes took effect, we’ve seen the numbers of PPP loans made in Mississippi increase substantially.  Mississippi banks have made more than 13,000 PPP loans between March 21 and April 4. That’s a much faster velocity of new loan origination than we were experiencing in February, and anecdotally it appears that most of those loans are going to sole proprietors or self-employed individuals.“

Fellows believes charter fishermen on the Gulf Coast will be looking to PPP lending as many are sole proprietors hurt by the pandemic in a way that commercial fishermen haven‘t been. "They've lost that whole spring tourism market,“he added.

Rural Hospitals

Rural hospitals in particular leaned heavily on PPP loans. As a result, medical facilities were the largest category of PPP borrowers in the state. Medical businesses represented the largest percentage of Mississippi loans by amount, 14.8 percent. Nationwide, medical businesses received about 10 percent on average.

Many of them were in dire straits before the pandemic. Data from the Center for Healthcare Quality and Payment Reform lists Mississippi as having the third largest number of rural hospitals at risk of closure, 41, and it ranks the second worst in the nation in terms of average profit margins. A 2015 report by Mississippi State University listed nine Mississippi hospitals at very high risk of closure, and five rural hospitals in the state have already closed, according to data from the Chartis Center for Rural Health.

Brock Slabach, senior vice president of the National Rural Health Association, told MCIR that in the early days of the pandemic so many patients were deferring or terminating elective procedures that rural hospitals were hemorrhaging cash. But once the PPP program was in place, “hospitals were able to keep their workforce in place by paying workers without any business coming in the doors.“

Restrictions in the early drafts of the PPP program excluded a number of the hospitals for different reasons. Some were excluded for being county hospitals, which were considered governmental organizations.  Others were excluded for being subsidiaries of larger hospital systems. In both situations the program was eventually amended to include those hospitals. The exception that prevented hospitals owned by local governments from applying was amended early on in April 2020. The exception for nonprofit affiliates of larger hospital systems, something Mississippi’s U.S. Sen. Roger Wicker actively campaigned to remove, was dropped in the recent PPP extension as part of the American Recovery Plan.

“It’s just the way it was written. For example, there's a rural hospital in Carthage, Mississippi, owned by Baptist Medical Group in Memphis. It was ineligible because its ownership made its total employee count more than the limit, but the hospital itself has less than 500,“ Slabach added. 

Harold Miller, president of the Center for Healthcare Quality and Payment Reform, said Mississippi‘s rural hospitals struggle from large uncompensated care costs as well as little non-patient income, such as state, federal and health district subsidies. The state also has some of the highest average charity care and bad debt ratios among rural hospitals.

But when it comes to the effects of the pandemic and PPP lending for those hospitals, Miller says the outcome depends on each hospital. “It depends on the type of care they give and the community they serve. Most don‘t have surgical units so they aren‘t missing out on some elective procedures that larger hospitals are dealing with. For rural hospitals it's more about changes to primary care. It depends on whether they have a lot of bad debt or if they are connected to a larger health care system. It depends how nearby industries were affected by the pandemic.“

Electric and Water Cooperatives and Broadband

Originally as crafted the PPP program also excluded nonprofits, and this restriction put a number of utilities at risk. Numerous representatives successfully lobbied the treasury specifically to include for profit and nonprofit electric cooperatives.

Nonprofit electric and water cooperatives, of which Mississippi has plenty, have since borrowed from the PPP program substantially. Multi-million-dollar loans have gone to nonprofit power utilities like Dixie Electric Power Association, Northcentral Electric Cooperative and the Southwest Mississippi Electric Power Association.

Lydia Walters, communication and human resources manager for the Dixie Electric Power Association in southeastern Mississippi, told MCIR that at the time the company accepted the PPP funds, it was under a “mandatory suspension of disconnecting power for nonpayment.“ That is, the utility was still supplying electricity to those who couldn’t pay, but it had to deal with the loss of revenue.

“Although it was a 60-day order from the Mississippi Public Service Commission, there was a concern that it could be extended indefinitely,“ she added.

Stephen Bell with the National Rural Electric Cooperative Association said the clarification was vital for electric cooperatives looking to the PPP for support as “they worked to keep the lights on and provide local families and businesses with certainty in an uncertain time. Congress played an important role in securing this needed clarity.“

Bell also added that a large change that came out of the CARES Act funding has been the investment into rural broadband by electric co-operatives.

Previously, Mississippi electric co-operatives were prevented from providing anything but electricity to their communities based on a rule that dated to the 1940s. In 2019, the state Legislature passed the Mississippi Broadband Enabling Act, which removed that restriction and allowed electric co-operatives to provide broadband that integrated with their electrical grid.

As the pandemic set in, the push to fund broadband grew, and the state set aside a large portion of its CARES Act grants to broadband development. Along with the PPP funds, it enabled the co-operatives to substantially invest in broadband capacity.

The state regularly ranks near the bottom for terrestrial broadband access. It is second only to Puerto Rico in having the least number of households with broadband, according to survey data from the U.S. Census.

According to Bell, “because co-operatives are built by and belong to their local communities, they‘re keenly focused on the needs of the community. You‘re seeing that play out in Mississippi in real time with these broadband deployment efforts.“ 

 

4 comments:

Anonymous said...

Only losers take government cheese

You a loser?

Big-D said...

In 2019, the state Legislature passed the Mississippi Broadband Enabling Act, which removed that restriction and allowed electric co-operatives to provide broadband that integrated with their electrical grid.In 2006 att put fiber cables down in my area. No service of any kind just buried the fiber and moved on.This was supposed to be from the Katrina upgrades to the service.But Hell after that long who needs it.

Anonymous said...

until that crazy 25% reduction in income req. is gone, ppp will continue to stall and not help those that need it. anybody that lost 25% or more is already gone

Anonymous said...

"In the throes of the pandemic, a Southern California businessman said he needed government help to support his struggling companies.

Mustafa Qadiri submitted multiple loan applications in search of federal funds to help his mortgage and advertising businesses, according to court records.

His Paycheck Protection Plan applications were approved and the government deposited roughly $5 million into multiple bank accounts controlled by Qadiri so the 38-year-old could pay his workers and cover other business-related expenses, court records state.

But the money never made it to the businesses he claimed to operate, federal prosecutors said.

Instead, Qadiri spent the money on himself, splurging on a Lamborghini, a Ferrari and a Bentley, according to the government. He also spent some of the PPP funds on “lavish vacations” and other personal expenses."

Now, more Ferraris and vacays for our "poor" MS business men and restaurateurs. The "GubMint is too big, but where's Mah Check" crowd cashes in again.


Recent Comments

Search Jackson Jambalaya

Subscribe to JJ's Youtube channel

Archives

Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).


Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.


Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS
.