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Washington • From Logan to St. George, small businesses are applying for much-needed government-backed loans from the Cache Valley Bank, which in turn plans to donate any profits to hospitals.

In the nation’s capital, a spat between Republicans and Democrats has held up hundreds of billions of dollars in additional funds for mom-and-pop stores, farmers and independent contractors as the economy dives into a recession.

In Salt Lake County, reports are surfacing of scammers trying to get minority-owned businesses to pay $2,500 to bump up their chances at such help, even though the fee is bogus.

As the coronavirus outbreak continues to rage against human life, its impacts are also propelling a range of responses from the heartening, neighbor-to-neighbor feel-good stories to partisan sniping to outright fraud. The small business loans offer an example of the good, the bad and the ugly.

“I think we're all seeing so much of the good come out, the Cache Valley Bank — what an amazing corporate community attitude,” said Rep. John Curtis, R-Utah. “And you see that really everywhere you turn. And yet we know that it does bring out the worst in people too.”

The good

When Congress passed the $2.2 trillion relief package, it set aside $350 billion for banks to issue loans that could be forgiven completely or in part to help small businesses stay afloat during the crisis.

The government-backed loans would flow through banks, which could charge a setup fee and 1% annual interest. If a business received funds from the Paycheck Protection Program and essentially kept its employees on the payroll, the loans would be forgiven minus the interest.

Cache Valley Bank had processed more than 1,500 loans as of this week, all of which charge the 1% annual interest set out by the Small Business Administration (SBA).

That interest could turn out to be millions of dollars as more loans are doled out but the bank doesn't plan to keep any of it. They're going to donate it to local hospitals dealing with the COVID-19 outbreak in the communities where the loans originate.

“We’ve been watching what’s been going on in New York and elsewhere and the hospitals and the doctors are just really the heroes in this situation,” said George Daines, Cache Valley Bank’s chief executive officer, “and I think we feel like we ought to support them and this is a good way to do it.”

The bank has been approached by a variety of businesses: a jewelry store, a dentist, an electrician, restaurants and motels, a car dealership and a theater.

Daines, who is quarantined with his family in Logan, says the program is helpful at a time when many lives have been upended. And getting the information out to those in need is paramount.

He, for example, hired a professional photographer to take a quarantine portrait — from an acceptable distance away — because he knew revenue from weddings and other events had dried up.

He explained to the photographer that she could apply for the government help and his bank is working on it.

“She had tears in her eyes,” Daines said, “and it may be the difference for that little family.”

As of Thursday, nearly 500,000 loans, valued at more than $130 billion, have been processed nationwide, according to the SBA.

Gov. Gary Herbert has been touting the federal aid as an essential part of Utah’s broader plan for economic recovery and called the federal stimulus package — offering up to $2 million in working capital to small businesses with less than 500 workers, roughly 90% of all Utah employers — “a godsend.”

“We have the ability to help our businesses stabilize,” Herbert said this week. “And that’s going to be a major blessing to us when it comes to economic recovery."

SBA Regional Administrator Dan Nordberg, who oversees the agency’s programs in Utah and five states, said Thursday that aid to help businesses is vital.

“This program is one of the largest economic recovery efforts in our nation’s history and was built in just seven short days, a true testament to the American spirit and demonstration of what is possible when we come together to serve a higher cause,” Nordberg said.

There have been glitches along the way, of course, and Congress may need to pour more money into the effort if it can agree on how much and when to do so.

The bad

Congress passed the stimulus package in late March, charging the SBA with offering guidance on the program as quickly as possible. Initially, there were questions about who would be covered, including faith-based organizations (they are).

Now, the challenge is connecting businesses to banks and then cash to accounts.

Howard Headlee, the president of the Utah Bankers Association, says lenders are working hard to help small businesses seeking aid. In some cases, bankers working from home are taking shifts so they can keep logging loans while others rest.

The SBA's website had some issues and guidance was slow to drip out, the bankers association president said.

Utah banks are “all working hard to just work through that. The system is what it is — it wasn’t made to process this many loans in this amount of time. And so everybody just has to be patient,” Headlee added.

The ability to roll out a massive, $350 billion program creates its own headaches. Add to that congressional disagreements.

The White House has asked for $250 billion more for small businesses and Senate Majority Leader Mitch McConnell pushed for a vote on that Thursday. It failed swift passage after Democrats objected.

“The country cannot afford unnecessary wrangling or political maneuvering,” McConnell said. “Treating this as a normal, partisan negotiation could literally cost Americans their jobs.”

Democrats counter that the small business funds already approved haven’t been fully tapped yet; Only 30% has been committed from that program while others are out of cash like economic injury disaster loans to advance a business $10,000 during the crisis.

Sen. Ben Cardin, D-Md., called the GOP move a “political stunt” that wouldn’t help small businesses in the short run.

Congress is likely to pass more legislation soon to prop up small business programs.

In the meantime, regulators and government agencies are trying to tamp down misinformation about the small business aid and keep scammers at bay.

The ugly

As businesses, already beset by shuttering store fronts and facing steep losses, looked to apply for government help, it was only a matter of time before fraudsters jumped in to take advantage.

Blake Thomas, Salt Lake County’s economic development director, heard about possible scams and encourages people to be on the lookout for predators during the crisis. Then he got an email from the county’s office set up to help refugees.

The note said that some business owners had said individuals were reaching out to them offering to help get a loan through the economic relief package or help them get it faster than competitors — all for a fee.

“Essentially, they were saying you can get the federal loan applications for $2,500 if you go through us,” Thomas said. “And then on top of that, I heard that similar fee was being floated to bump businesses up in the [Paycheck Protection Program] queue.”

Loan applications are free and the PPP program is first come, first served.

“I’m heartbroken by it,” Thomas said. “To have individuals or organizations that are trying to exploit or capitalize on the distress of our small business community. When I think about small businesses, I know that right now they’re juggling payroll, and rent, and all other costs associated with running their business. And then at the same time they’re being flooded with a lot of information as far as the federal stimulus, business relief programs and the SBA, and then also local, state and local municipal programs. So it’s really disheartening.”

Salt Lake County has a business help line, staffed Monday-Friday, 8 a.m.-8 p.m. at 385-468-4011 for those needing advice.

Headlee says businesses seeking aid should reach out to a lender they have a relationship with and not provide any information to someone who contacts them out of the blue.

He said, “If you didn’t initiate that, if it’s not your bank, and you didn’t initiate the request, I just would not respond to it.”

— Tribune reporter Tony Semerad contributed to this story.