Aug. 29—One month after Penny Antonelli-Flegel purchased her business in February 2020, the coronavirus pandemic prompted a shutdown that put much of the Spokane-area economy on an uneasy, indefinite hold.

"I literally took out our savings and more and invested in our company," said Antonelli-Flegel, owner of Digital Imaging Solutions in Spokane. "At first I thought (the shutdown) was going to be a couple weeks.

"And then the reality sunk in that this is not going to go away," she said. "I wondered if I had financially harmed my family."

But she, like thousands of businesses in the region and millions of companies across the nation, tapped into Payroll Protection Program loans offered by the U.S. Small Business Administration, which previously had been known mostly for offering low-interest loans to victims of natural disasters.

Chaos over ever-changing rules for how the money could be used, whether the money was a grant or a further financial burden in the form of more debt, and a clunky computer system got the program off to a rough start.

But the SBA rallied. Glitches got fixed. Bankers worked overtime, the rules got streamlined and money began flowing into empty coffers.

As of Aug. 15, the SBA had made about $471 billion in payments in response to about $498 billion in requests to be forgiven and classified as grants instead of low-interest loans, according to the agency.

In Washington state, the SBA says it approved 107,659 loans that provided more than $12.4 billion of the $659 billion total amount approved by Congress.

Greg Deckard, CEO and chairman of State Bank Northwest, was one of the local voices criticizing the initial rollout of the program. But, he now credits the program for jump-starting the local and national economies.

"I think it's one of the most beneficial, targeted programs that the federal government has put together," Deckard said. "The SBA did a herculean effort rolling out something they weren't designed to do. It took them a long time, but from our viewpoint, forgiveness has been going very smoothly."

Facing the abyss

Antonelli-Flegel started working a few years ago at Digital Imaging Solutions at 126 S. Sheridan St., Suite A, in Spokane. In October 2019, she was presented an opportunity to purchase the business started by the late Mark Lenz.

The deal closed in February 2020. She became a business owner just as the world began getting to know something called the coronavirus.

"When you take on a new business, there's not a lot of reserve," Antonelli-Flegel said. "I had that real fear ... to realize that because of unforeseen circumstances, things that were outside of my control, that it might have been a mistake."

She then reached out to Washington Trust Bank and they helped her fill out the original request for the first round of PPP loans.

"They were absolutely fantastic. They were working incredible hours to make sure we were taken care of. It showed, and I appreciate it," she said. "We all come from that working mentality. You have to work to build. It takes years to build in this industry. So, that (PPP) loan was crucial in keeping us going."

Lisa Emery has spent the past 25 years helping manage The Swinging Doors restaurant, 1018 W. Francis Ave., which has been owned for 40 years by her parents, Bob and Barb Materne.

When the shutdown hit, the restaurant had to close for 73 straight days for everything except a few-curbside orders.

"Somebody asked me how we pivoted during that time. We were spinning circles, not pivoting," she said. "We didn't know how long we would be shutdown, how long the money would last."

The restaurant used the first round of PPP funding to pay the salaries of the restaurant's longtime employees.

"We were happy we were able to retain our employees," Emery said, "but we were paying people to sit at home."

The original grant amount was completely forgiven. "In looking back, we are glad we used it the way we did," she said.

The second PPP round focused on restoring lost revenue. To qualify, companies had to show a 25% revenue loss in 2020 compared to the same period of time in 2019.

"We were able to use it better and it helped tremendously, because we had been shut down from November to January," Emery said. "We were very grateful to State Bank Northwest. We kept our employees and stayed in business."

Emery said without the federal funding, the Spokane economy would have taken several hits.

"I think there would be a lot more restaurants closed down, and businesses in general," she said. The PPP loans "definitely kept peoples' heads above water during that time."

Antonelli-Flegel agreed that the PPP loans were a lifeline.

The SBA representatives "have been fabulous to work with," she said. "Quite honestly, if they had not been able to facilitate what they did, I may have been one of those casualties of the pandemic and been out of business."

Jack Heath, president and chief operating officer of Washington Trust Bank, said his lending institution has already processed through 91% of the PPP loans it sought for clients. Its just now getting started with the second round.

"Starting in June, the forgiveness really accelerated and it has gone smoother," Heath said. "We haven't had any issues."

Deckard, of State Bank Northwest, said his team helped process loans that saved about 5,500 jobs, which would put it on par with one of Spokane's largest employers.

He noted reports of estimated fraud as high as 15% of PPP loans nationally did not diminish what the program did to save local companies.

"I know for certain that businesses would not have been able to survive without it," Deckard said.

Deckard, who also serves as treasurer for the Independent Community Bankers of America, said he fears the resurgence of COVID with cases of the delta variant could bring a damaging period for the economy.

"Every one of our borrowers is extremely appreciative ... but there is still consternation about where they are at with the new variant and whether we need (another round of PPP) again," he said. "But, I don't think Congress right now has the appetite" to fund another round.

Despite the growing worries, Deckard said the Spokane region benefited greatly from the massive lifeline made available by the SBA.

"I don't know of another way, without government assistance, that banks would have been able to lend during this crisis," he said. "I think we would have had significantly higher unemployment."