U.S. Sen. Dan Sullivan joined Anchorage Mayor Ethan Berkowitz’s thrice-weekly digital press conference on Wednesday to update his constituents on what to expect in the $2.2 trillion CARES package passed by Congress two weeks ago.
“We passed that 96-0 — a $2 trillion bill — which goes to this idea that nobody caused this. It’s more like a natural disaster or war that came up on our shores,” Sullivan said. “We had a strong national economy, Alaska’s was strengthening and then, bam! Everyone’s hit by this. This is a major responsibility for the federal government to get people through these challenges.”
Sullivan said that from what he’s been told by the Treasury Department, checks of $1,200 per individual and $500 per child — with higher income individuals getting less — should be in people’s bank accounts by the second or third week in April.
To avert, or at least limit the economic depression on the horizon, the government is focusing on getting money in the hands of small businesses with sustaining loans called ‘Paycheck Protection Program’ loans. To encourage small businesses to not lay off their staff, Sullivan said, the loans have the added carrot of turning into grants if the business is able to maintain its staff through an 8-week duration.
“The Treasury Department authorized the ability for community banks to get these loans out the door with a two-page application,” Sullivan said. “... any FDIC-insured entity, we can get these loans… In some ways, the federal government is enlisting them in the front line.”
Sullivan said he was concerned initially that Wells Fargo wasn’t among the banks participating, but he said he was relieved to be able to report that the banking giant with a heavy presence in Alaska, should be joining the ranks of lenders shortly.
“These loans are 100 percent federally insured, so there’s not a lot of risk to our banking community,” Sullivan said. “(The SBA Loans) apply to businesses with 500 employees or less, but the SBA has other ways in which they define ‘small business.’”
Sullivan explained that a gold mining or crude oil transporting operation could be considered a small business if it had as few as 1,500 workers, which could bode well for some of Alaska’s larger businesses.
Sullivan said businesses have the option of applying for the Paycheck Protection loan, or deferring payroll taxes for the remainder of the year, but driving businesses to keep workers employed is priority No. 1.
“With the Paycheck Protection Program, we tried to make it very broad so it would cover a number of key sectors,” Sullivan said, adding that commercial and subsistence fishermen could even be covered under the PPP or the Economic Injury Disaster Loan. “By the way, the $350 billion (appropriated for the PPP loans), it looks like that’s going real fast and that’s actually a good sign. Likely tomorrow, the Senate will authorize another $250 billion bill and hopefully that will be unanimous consent because we want this to move forward.”
Sullivan said that whether a business applies for the PPP or EIDL loan, they should receive a response within 3 days and that even if a business doesn’t qualify for an SBA loan, they can still apply for an EIDL loan.
“We created a low interest loan program that has the very important purpose of keeping employees and employers together. When we get out of this, we need our economy to be able to bounce back fast. If we are able to keep employers and employees connected, that’s one way of doing that,” Sullivan said. “Any small business can apply for this loan.”
Sullivan said the size of the approved loans is generally based upon a metric of two-and-a-half times the average monthly wages of the work staff from the previous year, subject to a $10 million cap.