More KY businesses get smaller relief loans after Lexington coal company got $10M
The second round of the Paycheck Protection loan program had helped Kentucky businesses secure nearly $1.1 billion as of Friday, according to the U.S. Small Business Administration.
That amount was spread over 18,202 loans statewide, according to the Small Business Administration. Those loan approvals came over a span of just four days, from April 27 to May 1. Kentucky is 30th among states and territories in dollar amount and 34th in number of loans approved for the second round.
The first round of the program saw Kentucky get 23,797 loans totaling more than $4.1 billion, but those loans were approved over two weeks. Small businesses were eligible to apply on April 3, and the program ran out of money on April 16.
After the program ran out of money in the first round, loan amounts have been much smaller nationwide in the second round. In Kentucky, loans have been more than 65 percent smaller.
Kentucky businesses that got loans in round one received an average of $175,369, according to the Small Business Administration. This time, businesses have gotten an average of $60,265.24. The average loan size nationwide is $79,000.
The personal paycheck protection loans are two-year loans with a 1 percent interest rate and deferred payments for up to six months. The loans will be forgiven by the government if at least 75 percent of the money is used for payroll and the business doesn’t cut employees or make salary reductions.
U.S. Small Business Administration Administrator Jovita Carranza and U.S. Secretary of the Treasury Steven Mnuchin said Monday that the lower loan size was a sign that “the program is broadly based and assisting the smallest of small businesses.” Large loans given to publicly traded, large corporations in the first round were heavily criticized.
Some Kentucky businesses with budgets in the millions of dollars used round one of the program to get millions of dollars in loans. Lexington-based coal company Ramaco was approved for an $8.4 million loan through the personal paycheck protection program, according to a company SEC filing from April 21.
Coal company struggling prior to COVID-19 gets big loan
Rhino Resource Partners, another Lexington-based coal company, received approval for a $10 million loan through the personal paycheck protection program on April 22, according to its SEC filing.
The Small Business Administration has not released a list of companies that received loans.
Rhino produces coal for electric utilities and steel production. The publicly-traded company has had financial struggles, but they aren’t new. Rhino hasn’t turned a profit in any of the last five years, according to Reuters financial reporting. Its 2019 net revenue — before the coronavirus outbreak — was a loss of $99.5 million. Its total operating expenses neared $221 million.
While Able Engine, a company with less than 10 employees, said it failed to get a loan in round one, Rhino got a loan with a reported staff size of 605 people. The federal government classified coal mining companies with as many as 1,500 employees as small businesses eligible for loans.
At time of publication, Rhino had not responded to a request for comment.
Nationwide, the second round of loans has already surpassed round one, as about 2.2 million loans have been given out, according to the Small Business Administration.
More than 3.8 million loans have been awarded since the start of round one, totaling more than half a trillion dollars in support, according to the Small Business Administration.
“We are fully committed to ensuring that American workers and small businesses continue to get the resources they need to get through this challenging time,” Mnuchin and Carranza said in a joint statement.
This story was originally published May 4, 2020 at 12:39 PM.