VT ranks third in nation per capita for help from federal coronavirus loan program

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Correction: The total value of the Paycheck Protection Program loans secured by Community National Bank was $87 million. The figure was incorrect in a previous version of the story. 

Vermont banks jumped early and often onto the federal Paycheck Protection Program, securing just over $1 billion in loans for nearly 7,000 small businesses across the state to remain open and keep employees on the payroll, even as the coronavirus pandemic devastates the economy.

The $349 billion program, administered by the U.S. Small Business Administration, is intended to help small businesses across the country stay afloat and keep their employees working with loans that could be forgiven if certain levels of employment are maintained.

Michael Pieciak, commissioner of the Vermont Department of Financial Regulation, said Tuesday in an email that Vermont ranks third in the country on a per capita basis in total loans secured. Only North Dakota and Washington, D.C. did better.

“Although the rollout of the program was bumpy, Vermont lenders stepped up and did tremendous work on behalf of our small businesses,” Pieciak said. “These loans must be closed within 10 days of receiving a commitment, so this large sum of money will be circulating in Vermont within days.”

The bumpiness Pieciak refers to is the fact that the program, launched April 3, officially ran dry on April 16, less than two weeks later, according to USA Today. There have also been reports of some large companies securing loans from the fund intended for small businesses.

More: Four infographics that show the spread of coronavirus in Vermont

Kathy Austin, chief executive officer of Community National Bank in Derby, said the competition for the loans was fierce. She said 4,900 of the 5,200 banks in the country were actively engaged in the process, but community banks like hers tended to be more successful.

About 60% of the loans were done by community banks, rather than large banks, according to the American Banking Association.

“The reason we were successful is not because we’re smaller, it’s because we’re more nimble,” Austin said. “We know our customers well.”

Avoiding economic catastrophe

Loan officers from Community National Bank started reaching out to their customers before all the rules for the federal program were written, giving them a head start. 

Justin Heilenbach, co-founder and president of Citizen Cider in Burlington, said he was getting emails almost daily early on from Justin Bourgeois, regional vice president for lending at Community National Bank.

“At that early stage it was unclear what it would even be,” Heilenbach said of the Paycheck Protection Program. “Even at that stage the bank said to start preparing these types of documents.”

Citizen Cider lost at least 40% of its business overnight when Vermont’s bars and restaurants were shut down on March 16, Heilenbach said, forcing him to furlough 30 of his approximately 90 employees. 

“We closed ahead of the governor’s order,” he said. “We saw it coming and wanted our employees to be first in line to file unemployment claims.”

More: Gov. Scott lays out plan for limited reopening of Vermont’s businesses, farmers markets

Thanks to the federal loan he received, Heilenbach has been able to keep his remaining 60 or so employees working.

“We committed to every other employee in the business that their job is secure for the next 90 days, our entire production team, our entire sales team, the administrative team in the business office, our finance team and marketing team,” Heilenbach said.

As for the furloughed employees, Heilenbach can’t say at this point when he will bring them back to work, because it depends on when Vermont’s economy is released from the grip of the coronavirus, known officially as COVID-19. 

“Community National Bank has saved thousands of Vermonters from total economic catastrophe through this program,” Heilenbach said. “You’re talking about people’s livelihoods.”

A war room

Eric Sorkin, co-owner with his wife, Laura, of Runamok Maple, also secured a loan from the Paycheck Protection Program with the help of Bourgeois. Like Heilenbach he was barraged with emails from the bank concerning the program.

“I don’t know if they literally formed a war room but that’s what it felt like,” Sorkin said.

The bottom dropped out of Runamok’s business along with every other business in the state, Sorkin said, after the economy was put on hold to battle the coronavirus.

“That put us in a very defensive posture,” he said. “We were making all the adjustments we could make to put ourselves in the best position to survive. The last lever we want to pull on is to make adjustments to our team.”

The federal loan allowed Runamok to keep all of its approximately 50 employees on the payroll. Sorkin said a few people left because of “personal concerns.”

“It basically put us back on track, not the same track, but it allowed us to keep our team together,” he said. “That was the Number 1 goal for us. At its core our business is our people.”

Austin said that all told her bank closed 560 loans under the Paycheck Protection Program for a total of $87 million. She said other Vermont banks did equally well, with competitors often working together to get the loans done.

“It was a time for bankers to shine I think because we didn’t get in our own way,” Austin said. “We didn’t have exactly everything we needed or wanted, but we did the right thing and moved forward with it. We worked together.” 

Contact Dan D’Ambrosio at 660-1841 or ddambrosio@freepressmedia.com. Follow him on Twitter @DanDambrosioVT. This coverage is only possible with support from our readers. Sign up today for a digital subscription. 

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