Few companies took advantage of the Federal Reserve’s $ 600 billion high street loan program, but a local company secured a $ 5.5 million loan last week.
Johnstown business owner John Burley said his loan will be used to keep his current operations going and start a new business.
He is currently looking for a Johnstown building to host his new gourmet popcorn company.
“We’re growing like Dickens,” he said.
At the start of the pandemic in March, Burley’s Johnstown ice rink company Everything Ice used its resources to manufacture personal protective equipment, generating millions in sales.
In addition, the company bought Music City Popcorn, a Nashville-based gourmet popcorn company that plans to expand Burley in Johnstown.
“It was a COVID opportunity,” said Burley. “The owner had a different business objective that was plumbing. COVID hit, and the demand for sanitation went way beyond popcorn. “
Music City popcorn was also in high demand when Burley bought the company.
“Nashville can’t keep up with demand,” he said. “We are setting up a large-scale production in Johnstown.”
Burley plans to hire 30 more people in Johnstown and sees dramatic growth in all of his business activities.
“We’re going to be a $ 30 million company in two years,” he said.
The five-year loan he recently received, with principal and interest deferred, will give cash to his company to help achieve that goal.
The Main Street Lending Program, approved in March by the Coronavirus, Aid, Relief and Economic Security Act, was designed to support smaller businesses that collectively employ millions of workers.
The Federal Reserve allocated $ 600 billion to the program, but as of October 30, only 400 loans totaling $ 3.7 billion had been granted, according to a press release from the Board of Governors of the Federal Reserve System.
The Federal Reserve Board adjusted the terms of the program to better appeal to small businesses, but by the time the program ends on Thursday, the total approved credit will be just over $ 6 billion, according to a recent report from CNBC.
Burley was one of those recipients. 1st Summit Bank has confirmed that Burley has received a $ 5.5 million loan under the program.
1st Summit Senior Vice President and Commercial Loan Director Michael Paulman led the application process for Burley. He explained why the Main Street program was underutilized.
“The program had many conditions,” said Paulman. “It wasn’t suitable for small businesses. It wasn’t easy to get through.
“John Burley and I started the process in August and finally went through with it in December. Some of the requirements the Federal Reserve made for five-year loans have not paid off for most small businesses. “
The loans were based on earnings before interest, taxes, depreciation and amortization.
If a company’s EBITDA wasn’t that high, they might not qualify for the minimum loan amount, Paulman said.
Burley was the only applicant 1st Summit had for the program.
“Ultimately, I’m glad we were able to help John grow his business,” said Paulman.
Russ O’Reilly is a reporter for The Tribune-Democrat. Follow him on Twitter @RussellOReilly.