Five Grand Forks businesses received federal loans of at least $5 million during the COVID-19 pandemic — just a fraction of the money that has kept the national economy working while the community and the nation grapples with the virus.
The funds, disbursed earlier this year by the Small Business Administration, are forgivable loans meant to help maintain jobs and keep the economy humming in communities around the country. Grand Forks’ share of the money is between $110 and $234 million, helping businesses retain about 16,500 jobs, according to federal records.
The Herald is reporting on the data, released this week, as a matter of routine government transparency reporting, showing the public how federal leaders have managed their tax dollars and who has received them. And because the total amount of money is so vast, the data also gives a valuable portrait of how the federal government’s actions are shaping Grand Forks and North Dakota’s economies.
The resulting picture is of an avalanche of money propping up the economy, with 19,724 loans worth about $1.75 billion propping up businesses around the state.
The Grand Forks recipients of the largest loans, valued at $5 million to $10 million, are the following groups. Federal records show these recipients claimed the money would help retain 1,723 jobs.
Acme Electric Motor, Inc.
Valley Senior Living
Edgewood Opco LLC
Advanced Engineering and Environmental Services, LLC
Multiple leaders at those companies say the money has been extraordinarily important. For Garth Rydland, president and CEO of Valley Senior Living, the pandemic has meant a huge financial strain on a nonprofit group that cares for 550 residents in the city. The roughly $5.3 million the group received, he said, has helped fund recent payrolls, benefits and retirement costs — and thus left the group with cash reserves to face what comes next.
“Our expenses have been increasing greatly for payroll and (protective gear),” Rydland said. “We've had lost revenue. We've had the costs of constructing a COVID unit that's separate. There are a lot of extra costs that we've incurred, and we don't know how long the pandemic will go for financially affecting our business.”
For AE2S, the Grand Forks-headquartered engineering firm, its $5.4 million loan represents long-term thinking, CEO Grant Meyer said.
"In terms of did we immediately have the same type of impact that a retail business would — I don't believe we did,” Meyer said.
But many of the firm’s clients are municipalities, he said, so there’s real concern about revenue streams as those groups write out their budgets in coming months — and make decisions that could shift the company’s bottom line.
“And really, the intent of the Paycheck Protection Program, it was really about job security,” he said. “It's about preserving jobs for people. AE2S has viewed it in that way.”
A spokesperson for Acme Tools said in an email that the company did not furlough or lay off employees.
Grand Forks’ share
There were two sets of loan data released this week. One describes all loans smaller than $150,000, which don’t come with the names or addresses of the recipients — just the city, state and local bank that lent out the SBA’s money. But even though those loans are anonymous, they come with precise, down-to-the-cent counts of the loaned money.
A Herald analysis shows that Grand Forks received about $32.4 million, or about 6.3% percent of the statewide total of nearly $513 million for these smaller loans. Of the portion that went to corporations, Grand Forks got roughly the same share; of the portion that went to nonprofits, its share was more than 10% of the statewide total.
A second set of data shows large-scale loans from the SBA. Those come with detailed data — down to the names and addresses of the recipients — but the sizes of the loans are only described in broad ranges. That means the total money that flowed into Grand Forks from these larger loans is anywhere between $87.6 million and $202 million. Statewide, that figure is anywhere between $845 million and $2 billion.
There are nine more groups statewide that received loans of that scale. They are:
Anne Carlsen Center, Jamestown
Miller Insulation Co, Inc., Bismarck
Minn-Dak Farmers Cooperative, Wahpeton
Nored, Inc., Minot
Northern Improvement Company, Fargo
Steffes & Son Manufacturing, Dickinson
Truenorth Steel, Inc., West Fargo
W.W. Wallwork, Inc., Fargo
Wyoming Casing Service, Inc., Dickinson
In East Grand Forks, no loan greater than $5 million was disbursed. The largest, a loan between $2 million and $5 million, went to R.J. Zavoral & Sons, Inc.
The data has limitations though, rendering many of the statistics useless. A significant number of businesses did not indicate the race, gender or veteran status of ownership.
Other gaps make it hard to tell precisely what the money helps borrowers do. In order to have loans forgiven, borrowers had to state the number of jobs the funds would help them retain. But in many cases for North Dakota loans, that number is zero, or the space in the federal data is blank.
CanadInns is one of the Grand Forks companies for which there is no jobs data, on a loan of between $350,000 and $1 million administered by Bremer Bank on June 3.
And Strata Corporation’s loan data indicates zero jobs retained for a loan of between $5 million and $10 million. Chief Administrative Officer Tom Rerick said that appears to be data provided by the lender the company worked with; Strata has not furloughed or laid off any employees, he said.
"It's been a great program. I think it's been great, in fact, for the whole country," Rerick said. "Without it, we'd be 1929. It's very fortunate everybody got together and got this project put together."
Is it enough?
Will the money be enough? Not everyone is so sure.
Barry Wilfahrt, who leads the local Chamber of Commerce, said he’s optimistic that upper Midwesterners have learned to act responsibly — socially distancing, wearing masks and liberally applying hand sanitizer, making it likelier that businesses are on their way back toward normalcy. That makes it less likely that they’ll need another round of federal funding to survive.
"As long as we use common sense and take precautions, we'll be moving in the right direction,” Wilfahrt said.
But the virus is still very much a threat, ravaging Florida, Texas and Arizona in recent weeks, and a vaccine is likely many months away.
Blue Weber, the executive director of the local Downtown Development Association, was more tepid on prospects. He compared the local business community — especially the small businesses he tends to — as a ship. That ship took on a great deal of water in the spring, and the government helped keep it afloat.
But to press the metaphor, there still might be stormy seas ahead.
"I wish that I had better answers, but it's hard,” Weber said. “We don't know what the next month looks like. We can only look back on the history we have now of the past four or five months. Even those four or five months, it's hard to say … did it work?"
Above all else, though, local leaders express gratitude for the funds.
"The PPP money was absolutely vital for the survival of a lot of our local businesses, particularly our smaller local businesses,” Wilfahrt said. "I talked to many businesses that were able to stay open, to keep employees on (as a result)."
Whatever happens will depend, of course, on what happens to the virus. And that unknown future places many smaller businesses with direct customer contact — like bars, retail shops and the like — at risk.
"My concern is, if we start seeing those outbreaks again, I think we're better prepared for it,” said Phil Gisi, executive with Edgewood, the firm receiving the largest kind of federal loan in Grand Forks — which he said helped fund the group’s senior care facilities. “But I still think there could be some major impacts coming up if we have outbreaks."
Herald reporter Adam Kurtz contributed to this report.