Keith Allen, owner of Floors by Keith in Wheat Ridge, at first resisted the idea of taking government dollars during the pandemic.
“It was my first time to accept help from the government. And it took some searching inside of me to be able to do that,” Allen said. “I grew up on a farm and ranch with a dad who lived through the Great Depression. He taught me you get what you work for and the cows don’t milk themselves.”
Early in the shutdown, a backlog of work kept Allen busy. But by summer, floor installations slowed dramatically, to the point he needed to either cut loose his crew of five or secure financial help.
“We made a decision that we would try to do everything we could so as to not end up on unemployment, leaving it to the people who really needed it,” Allen said.
He sought a forgivable loan under the Paycheck Protection Program, the biggest source of aid provided under the Coronavirus Aid, Relief, and Economic Security Act or CARES Act, a $2.2 trillion aid package then-President Donald Trump signed into law a year ago Saturday.
It wasn’t an easy process, but Allen eventually received $19,000 from the U.S. Small Business Administration. Combined with another private loan of just under $10,000, he kept everyone on the payroll and purchased two pieces of equipment so he could bid on more jobs.
The $19,000 Allen received is just a tiny sliver of the more than $37 billion in federal COVID-19 funds approved by Congress that have made their way into the Colorado economy the past year, according to the Peter G. Peterson Foundation, which maintains a COVID-19 spending database tracking distributions through16 major federal programs.
Allen’s story brings the massive funding push down to a personal level. Colorado distributions from federal COVID-19 funds worked out to $6,434 per resident so far. Colorado ranks 30th among states for what it received on a per capita basis, just behind Oregon and Ohio, and just ahead of Florida and Texas.
The lion’s share of funding, $17.6 billion, went to small businesses — with $14 billion issued as PPP loans and another $3.6 billion in Emergency Injury Disaster Loans and loan advances. Both programs are administered through the SBA, with applications and underwriting handled by banks and other lenders.
The next biggest chunk, $6.17 billion, per the foundation’s estimates, went to unemployed workers in benefits administered through the Colorado Department of Labor and Employment (CDLE). That federal money boosted the $2.8 billion paid out from the state’s unemployment program since the pandemic started.
A new program for independent workers, called Pandemic Unemployment Assistance, accounted for more than a third of the federal unemployment funds that went out in Colorado, while enhanced federal payments of an additional $600 a week through July and $300 a week later in the year represented just under half. A federally-financed extension of state benefits, normally capped at 26 weeks, provided most of the remainder.
“The supplemental federal benefits originally provided by the CARES act and extended by the Continued Assistance Act and American Rescue Plan have been critically important in helping hundreds of thousands of Coloradans keep food on the table and a roof over their heads this last year,” said Joe Barela, executive director of the CDLE.
Leon Mason was among those who received help. He initially survived on savings after losing his job as executive director of staff for the Denver City Council in September 2019. When the pandemic hit, he was still looking for work, a task that became much harder as governments started shedding jobs to cope with budget shortfalls. By July, he joined the tens of thousands of Coloradans seeking unemployment assistance.
“My income was reduced severely,” Mason said. “Every little bit helps.”
The help came in an extra $600 a week in Federal Pandemic Unemployment Compensation, which expired at the end of July. It was replaced temporarily by $300 a week from the Low Wages Assistance program in late summer. Late last year, the Continued Assistance for Unemployed Workers Act restored the $300 a week payments.
The support wasn’t enough to prevent Mason and his wife from having to sell their Central Park home and eventually relocate to Aurora to lower their housing costs. Getting unemployment assistance was difficult, in part because the state system was not designed to handle the volume of applications coming in, and also because of a massive wave of fraudulent applications. Mason said his wife was able to work through the downturn, which provided a base of support that he realizes many others lacked.
Mason was so frustrated with his experience collecting benefits that he applied for an opening to run the state’s unemployment insurance program, hoping his years of experience in government administration and his travails as a beneficiary could help the state right the ship.
“We understand you are overwhelmed. What is the next step to get people back on the right side of things? The program is in a bad spot,” he said.
Flooding the zone
Congress, the Trump administration and the Federal Reserve turned on the funding hose quickly and at full force once they realized the severity of the pandemic. They abandoned the more restrained approach taken during the Great Recession, where fears of moral hazard, unleashing inflation and federal deficits kept a cap on the assistance provided.
The Committee for a Responsible Federal Budget, which maintains a separate COVID-19 funding tracker, calculates Colorado’s legislative allocation of COVID-19 funds at $41.4 billion, of which $36.2 billion has been disbursed or committed. The Trump Administration provided another $1.9 billion to Colorado from funds under its control. The Federal Reserve lent $341 million to larger businesses and bought $470 million in PPP loans from Colorado lenders, freeing up capital so they could go back out and make more small business loans.
Those counts don’t include the $1.9 trillion American Rescue Plan, which includes an estimated $6 billion in assistance slated for Colorado governments. That ARP money has already started making its way into individual bank accounts via deposits of $1,400. And it is worth noting that because of the CARES Act, Colorado homeowners were able to skip an estimated $316 million in mortgage payments under forbearance agreements, according to Black Knight. Unlike most of the COVID-19 funds, that money must eventually be repaid.
With so much federal money going out, how did Colorado and its residents fare compared to other states? In general, the state lagged, based on per capita distributions, ranking 30th overall. The state’s highest-ranking, 18th, came in small-business assistance. Businesses had to apply for forgivable loans from the SBA, and in Colorado, they weren’t shy about it.
Sara Hueneke Ernst, who owns or co-owns The Original Pancake House locations in Greenwood Village and Cherry Hills Village, received two PPP loans last summer, allowing her to rehire about 60 workers she had to furlough when non-essential businesses were ordered to close.
Unlike Allen, Ernst said she wasn’t hesitant about seeking and spending government dollars. State and federal public health orders limited her ability to serve customers and pay her employees. She used the federal money to pay her staff based on the wages and tips they averaged prior to the pandemic, even though business was down significantly.
“For me, it was such an unpleasant emotional roller coaster,” she said. “The PPP is payment for taking my business away from me for 18 weeks and limiting my ability to do business for over an entire year.”
Among those pushing hard to get the $14 billion in PPP funds into the hands of Colorado small-business owners like Allen and Ernst was Bill Airy, owner of Lendio Denver, a lending platform. He and his wife worked long hours, late nights, and through their weekends to help clients obtain funding, often after large banks had ignored or rejected their applications. They are still busy with the latest round of PPP, which has again gotten bogged down, this time because of concerns about fraud. Set to expire March 31, the round was extended another two months.
“This is by far the hardest thing I have had to endure in my life. I’ve broken down crying with business owners on the other end of the line. This is the war of my generation and we are trying to help one business at a time,” he said.
Another area where Colorado was slightly above average compared to other states was in its ability to get money into the hands of unemployed workers. The state ranked 23rd for benefits distributed on a per capita basis, although a higher unemployment rate might have figured into that.
Colorado residents ranked 43rd when it came to claiming the first round of Economic Impact Payments or the $1,200 stimulus checks the IRS distributed. Those averaged $799 on a per capita basis. Residents of Maine, West Virginia and Vermont did better, bringing in more than $900 each.
Some Colorado residents unwittingly threw away envelopes containing debit cards with their payments, but they were likely rare cases. A better explanation is that median incomes are higher in Colorado than they are in most states. Many individuals simply made too much to qualify for direct payments.
Colorado is near the bottom when it comes to per-capita funding provided to local and state governments to combat the outbreak, 46th, and in federal support for health care providers, 49th. Wyoming and Vermont, smaller states, did best on those measures, reflecting a minimum threshold of payments that some programs provided.
Another possible explanation is that the outbreak wasn’t as severe in Colorado as it was in more crowded states like New York and California. It appears hospitals here, unlike small businesses and the PPP, weren’t as aggressive in applying for assistance through a program called the Provider Relief Fund.
“In general, Provider Relief Fund moneys were also targeted to COVID hot-spots or rural hospitals,” said Jeffrey Holland, vice president of research at the Peter G. Peterson Foundation. “Much of the initial $50 billion allocated through the Provider Relief Fund may have benefited states with a higher number of large, financially sound health care providers, as that first wave of relief was based on providers’ share of 2018 net patient revenue.”
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