Alaska businesses received a relatively low share of the loans handed out under the federal Paycheck Protection Program when compared to the percentage of small businesses in other states that received the loans, according to an analysis by the Center for Economic Development at the University of Alaska Anchorage.
But the program was widely used in the state, and Alaska recorded larger loans on average than most other states. That’s perhaps because of the higher cost of doing business here, analysts said.
Alaska businesses were approved for $1.3 billion of the more than $500 billion program Congress approved in March, according to the latest figures from the Small Business Administration.
“This program has not been perfect, but it’s been really popular and has helped lot of businesses get through a tough time,” said Nolan Klouda, who heads the center. “There’s still the question of whether it’s enough.”
More than 11,000 small establishments received the loan, representing 53% of those businesses in the state, according to the review. That is well below the U.S. figure of 62%, according to the analysis.
By that measure, Alaska ranked 46th in the nation.
The calculation excluded the self-employed and independent contractors, which are also eligible for the loan.
There could be various reasons for the relatively low amount of PPP loans in the state, Klouda said.
“It could be that in some states, banks were a little bit more open-arms to businesses,” Klouda said. “And there are some indications Alaska’s economy didn’t get hit as hard as other states.”
He said in-state banks led the lending. Northrim Bank processed about 2,600 loans, or 23%. First National Bank Alaska processed about 2,200 loans, or 19%.
Meantime, San Francisco-based Wells Fargo was slow to get its PPP program on track, Klouda said. Wells Fargo did process about 1,100 loans in Alaska, or 10%, according to the analysis.
“It speaks to the importance of smaller community lenders,” he said.
Jon Bittner, with the Alaska Small Business Development Center, said another factor for the low PPP numbers in Alaska could have been the original design of the federal relief program.
Its initial eight-week forgiveness period was too short to meet the needs of many Alaska companies, including in tourism, that earn their money in summer.
But Congress in early June extended the loan’s forgiveness period, nearly six months from two months, to last beyond the summer. The loan can be forgiven if employers properly cover payroll and operating expenses such as utility bills.
The analysis is based on data released last week by the Small Business Administration, following a lawsuit from news organizations and pressure from lawmakers.
The information disclosed the names of businesses that had received loans exceeding $150,000.
Alaska ranked 15th in loan size, averaging about $112,000 a loan, beating the national average by about $5,000, according to the analysis.
The state’s health care and social services industries received the most PPP loans, at 1,365, followed by construction, according to the analysis.
“It’s counterintuitive, but health care has suffered a lot,” Klouda said.
Early during the pandemic, elective medical procedures were restricted for several weeks, hurting visits to hospitals and clinics, he said.
The health care industry is also a large employer in the state, so it makes sense it would receive a large number of the payroll-based loans, said Tammy Green, chief executive of Anchorage Neighborhood Health Center.
With 30 health care providers, the center in Midtown Anchorage received a PPP loan for $2.2 million, Green said.
“In the last couple of months we have seen people starting to come back for routine health care, but still with that sense of concern (about exposure to COVID-19),” she said. “I would say what people considered urgent a year ago, they might be rethinking that.”
Applicants said the loans would protect about 114,000 jobs in Alaska, about a third of the jobs in the state, the review found.
Klouda said thousands of Alaska businesses have not taken advantage of the loan. The program still contains about $130 billion, he said. The application deadline is set for Aug. 8.
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