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A forgivable loan program for businesses that keep employees on the payroll through the current economic shutdown has helped keep small businesses afloat, Iowans told members of Congress on Wednesday, but the coronavirus pandemic still may claim Main Street businesses.

“I think that the Paycheck Protection Program has provided an important lifeline to some businesses,” Bill Menner, executive director of the Iowa Rural Development Council, told a U.S. House subcommittee on small business.

The program was designed as a forgivable loan if a business kept its employees on the payroll for eight weeks. The funds could be used for payroll, rent, mortgage interest or utilities.

The program had limitations, however, and many small businesses were not able to participate, Menner said during the virtual hearing chaired by Iowa 1st District Rep. Abby Finkenauer, a member of the House Rural Development, Agriculture, Trade and Entrepreneurship subcommittee of the House Small Business Committee.

In particular, he said, restaurants and other businesses closed by government orders were not able to take advantage of the loans because it would have required them to bring back their entire staffs when they were operating for takeout only or not open at all.

Small businesses lead the way for many communities, especially in rural America, said Finkenauer, a Dubuque Democrat.

“When this crisis is over, we must make sure our small-town pharmacists, town-square restaurants, hardware stores and florists are still in business and serving their communities,” she said. “Right now, their futures are in doubt.”

For some businesses, the Paycheck Protection Program provided emotional as well as financial support, Melissa Moretz, a farmer and Mason City banker, said.

“While we were filling out the application together, (a businessman) stopped me and he said, ‘Melissa, I am responsible for nine families. What do I do if I can’t take care of those nine families?’ ” Moretz said. “At that point in time, I realized that this is what we’re here to do. So that’s one small story of success out of that program.”

Her bank was able to help more than 650 businesses secure more than $86 million from the Paycheck Protection Program, she said.

Not everything is going smoothly, she added. Some of those businesses are now getting close to the end of their eight-week loan but are just now getting guidance on what they must do to be eligible for loan forgiveness.

“So they’ve been spending this money for six weeks and now they’re unsure if they did it correctly,” she said.

A key to her success, both on the farm and at the bank, was access to reliable internet service, said Moretz, who farms near Kensett in Worth County.

“I’ve been working from home for the last two months and, thankfully, we do have in our area a good source of rural broadband, but it’s not the same just a few miles away,” she said.

As he looks ahead to what a COVID-19 recovery looks like, Menner has no doubt access to high-speed broadband will be key to the future of rural America.

“Small businesses in many places have pivoted to provide a greater online presence, assuming their internet speeds are sufficient to do so,” said Menner, who lives in Grinnell. “Rural residents are working remotely in huge numbers. ... Rural communities are fashioning tech-based, coworking spaces and incubators and venues for online collaboration.

“Unfortunately, too much of rural America is disconnected. And the opportunities that arise from the ashes of this pandemic in regard to distributed work and online commerce and tech-based collaboration will be lost” if rural communities do not have access to high-speed internet, Menner said.

Finkenauer compared the impact COVID-19 is having on rural Iowa to the losses experienced during the recession in 2008-09.

Then, she said, rural America was hit harder than more urban areas and did not recover as quickly.

“Many rural areas struggled with people moving away during that time and losing more and more jobs,” Finkenauer said. “So the geographic division in our country will likely intensify if we don’t get this right when it comes to this recovery.”

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