Some recycling companies get payday loans; others are scratching


The $ 349 billion initial funding for the paycheck protection program ran out within two weeks. | NIKCOA / Shutterstock

Waste pickers and other processors across the country are turning to a federal aid program to help them overcome cash flow problems caused by the coronavirus. Some have been successful, but others face banking complexities and depleted funding.

The Paycheque Protection Program (PPP) was spear this month by the Federal Small Business Administration, as part of the CARES (Coronavirus Aid, Relief, and Economic Security) Act that was approved by Congress in March.

The program, which was originally endowed with $ 349 billion, offers businesses a loan designed to keep their employees on the payroll. However, the funds were exhausted within days and Congress is now working on legislation to fill the coffers.

One plastics recycling company that applied for a loan – but was written off on its first attempt – is Northwest Polymers, based in Molalla, Oregon, which processes plastic waste from manufacturers and other industrial sources. .

Shortly after applying, company owner Mark Shuholm received an email from his bank telling him there was no more money to lend. Due to overwhelming demand, high volume of requests and limited time, the bank was unable to process all requests before funding reached its cap.

Shuholm described the PPP application process as a bit like a lottery.

“If you had the right relationship with the right bank that had their system in place to process and submit the application, then you were probably funded,” he said.

Plastics Recycling Update spoke to various recycling companies who have applied for PPP loans in recent weeks. They reported mixed results, and mostly echoed Shuholm’s sentiments: success is largely down to the timing and the relationships the candidates had with financial institutions.

“The rules have continued to change”

Under the PPP loan, businesses that keep their employees on the payroll for eight weeks after receiving the loan and use the money according to SBA guidelines on payroll, rent, mortgage interest, or utilities will have the entire loan canceled at the end. of the eight week period. Businesses work with their own bank to seek help.

The program began receiving applications from small businesses, nonprofit groups and other entities with fewer than 500 employees on April 3. The $ 349 billion was quickly allocated to nearly 1.7 million applicants across the country and on April 16 the program was closed to new applications.

But Senate lawmakers on April 21 adopted the “Paycheck Protection Program and Health Care Enhancement Act”, provide additional funding for PPPs and other coronavirus relief efforts. Treasury Secretary Steven Mnuchin said the legislation gave an additional $ 310 billion to the PPP. The plan was due to be voted on in the House of Representatives on April 23.

“If you had the right relationship with the right bank that had their system in place to process and submit the application, then you were probably funded. “
–Mark Shuholm, owner of Northwest Polymers

However, some recycling entities were able to obtain loans during the first wave.

Denton Plastics, based in Gresham, Ore., Is a reclaimer that processes both post-consumer and post-industrial plastic waste. The company recently learned that it had been approved to receive a PPP loan after moving quickly to apply and staying on top of some complicated application details.

“It was pretty stressful just because the rules kept changing,” said Nicole Janssen, president of Denton.

Janssen said that a key part of the company’s success was having a strong relationship with his bank. Denton has used the same bank and worked with the same people for years, making the process of troubleshooting application issues easier.

Denton did not lay off any employees and the loan will help the business continue to operate at steady employment levels. Janssen said the financial assistance was important because the waste picker’s overall business is down 10-20% since the pandemic took hold.

The nonprofit Eco-Cycle processor in Boulder County, Colo., Also encountered the intricacies of the application process, but did not receive any money.

The organization, which operates the municipal material recovery facility (MRF) in Boulder, banks with a credit union and this financial institution had to obtain approval to participate in the P3 program before accepting applications.

With the rapid evolution of federal government rules, the process of preparing for acceptance of applications has taken longer than usual.

After the credit union was approved and the Eco-Cycle application was completed, the organization submitted it but was informed that the PPP money was gone, said Suzanne Jones, executive director of the organization for purpose. non-profit. She said the group would continue to explore loan options.

“We are ready, but we have not yet succeeded,” she said.

Jones said she understands that with more money likely to be cleared for the program, companies that fail in the first round may be reconsidered for funding.

At Northwest Polymers, Shuholm also aims to be considered in the next round of loan applications. He noted that his business is still in operation and his employees are in good health.

“As with everything else in this current environment, we are taking this in stride and will find a way to get through it,” he said. “I am impressed by the cooperative spirit and teamwork of all of our customers and suppliers. “

At the same time, however, the experiences of small businesses during this episode shed light on some in the banking industry. A recent Wall Street Journal article reported that approval of the request was not necessarily based on a company’s chances of surviving the pandemic.

“Whether or not a business is successful often depends on how and where it does its banking,” the newspaper reported.

In another indication of power banks in the PPP process, Wells Fargo faces trial alleging that the company has unfairly prioritized businesses looking for larger loans, instead of treating them on a first come, first served basis. Bank of America, JPMorgan Chase and Bancorp were also prosecuted.

Help where it matters

In Vermont, an electronics recycling company that has been approved for a PPP loan says the money will be a serious help to continue operations.

American Retroworks, which operates a recycling plant in Middlebury, Vt, was among the first in its county to file its claim at its local bank, owner Robin Ingenthron said. The company was approved for a loan of $ 224,000, based on eight weeks of average salary costs from last year.

Before the payroll program, Ingenthron did some pretty gloomy contingency planning. The possibilities were similar to what the company anticipated in 2014 when it lost a big contract and in 2008 during the financial crisis, he said.

“There was definitely a scenario where we would go to Chapter 11 and use the remaining money we had to outsource whatever was left and leave the factory clean,” he said. “We’ve had this and worse scenarios, and it provides us with a better one.”

Ingenthron said it’s important for businesses to think about not only their own operations, but the businesses they work with as well. He worked with downstream clients as well as with the owner of one of his facilities to help them apply for the program. It’s important to consolidate the activities that a business relies on, Ingenthron said.

“The way the program was designed worked perfectly for us. “
–Steve Chafitz, President of the electronics recycling company e-End

Frederick, Md., Electronics recycling company e-End has been approved for a six-figure loan under the program, a substantial boost for the business. In March, e-End closed its processing plant to ensure the safety of employees and customers. The company plans to reopen once security threats from the pandemic have passed.

Without the PPP funds, e-End would have had to dip into its cash reserves to continue paying its employees, said company president Steve Chafitz.

“Obviously this is something we didn’t want to do because there was no income to make up for it,” he said.

With the funding, e-End is able to continue paying its 20 employees even if the facility is down, as well as paying rent and utilities.

The story of the Maryland recycling company sheds light on another side of the PPP process: In some cases, the experience has turned out perfectly. The company submitted documents on April 4 and was approved for the loan two days later.

“The way the program was designed worked perfectly for us,” said Chafitz, noting that his good relationship with his bank, as well as the completeness of the information submitted with the application, helped speed up the approval.

The company received its PPP funds on April 13.

Colin Staub, Jared Paben and Dan Leif contributed to this report.

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