At least 23 Minnesota lawmakers received nearly $1.4 million worth of low-interest, forgivable loans from the federal Paycheck Protection Program, according to newly released data from the Small Business Administration.
Democratic-Farmer-Labor and Republican legislators alike received economic assistance from the federal program, approved in late March at the height of draconian stay-at-home orders that temporarily shuttered many businesses and led to an immediate economic freefall. The $502-billion effort quickly shoveled money out the door to businesses, and faced litigation in recent months over the lack of transparency.
The recipients came to light this month after a federal judge ruled in favor of news organizations that sued for the names of all businesses that received loans. Previously, the Small Business Administration shielded the names of businesses that received loans smaller than $150,000, representing the vast majority of those that received COVID-19 relief loans.
In Minnesota, the program’s footprint has been large. More than 100,000 businesses received PPP loans, including everything from mushroom producers to dairy farmers to dentists. Minnesota landmark Treasure City, the Royalton gift shop known for its impressive array of kitschy souvenirs, received a $28,300 loan. Well-known local artists like Trampled by Turtles, Doomtree and Dessa all received loans. As did KQRS radio host and podcaster Tom Barnard.
The total amount of PPP loans smaller than $150,000 added up to $2.7 billion.
Congress is currently negotiating another round of COVID-19 stimulus, which is expected to include additional funding for Paycheck Protection Program loans, although with new rules intended to prevent fraud as well as abuse by large companies or those who have benefitted — rather than suffered — from the pandemic.
The batch of data revealed that Minnesota lawmakers — including many who voted against providing state aid to businesses earlier this year — were among those who applied for and received economic assistance.
They included more than a dozen state senators — both DFL and Republican — including Senate Majority Leader Paul Gazelka, R-East Gull Lake, whose insurance agency received a $27,600 PPP loan, as well as a $1,000 Economic Injury Disaster Loan, or EIDL.
DFL state Sens. Melisa Franzen López of Edina and Ron Latz of St. Louis Park both received PPP loans for their businesses. Franzen López, co-founder of marketing firm NewPublica, received $205,200 in aid, including a $150,000 EIDL. Latz received a PPP loan of $15,900 for his law firm.
Gazelka, Franzen López and Latz all voted in favor of a state package of financial aid for small businesses earlier this year.
Other lawmakers, however, took taxpayer-funded aid while turning down the opportunity to help Minnesota small businesses.
Among them was state Rep. Steve Drazkowski, R-Mazeppa, one of the fiercest opponents in the Legislature of government intervention, as well as a vocal critic of public health measures ordered by DFL Gov. Tim Walz.
Drazkowski was among eight GOP lawmakers who received federal aid but later voted against a broad $208 million COVID-19 economic relief bill approved by the Minnesota House. That package included $55 million in small-business emergency loans.
His company, Ron-San, Inc., a Winona shoe store that operates under the name of Baker Shoes, received $5,800. He defended the loan, saying: “Legislators’ businesses have been hurt as bad as every other businesses by the actions of this governor.”
In subsequent tweets, he said he would be “forced to repay” the loan but elaborated by saying: “The money will actually be paid for in taxes and my business pays lots and lots and lots of taxes for it’s very small size.”
State Rep. Joe McDonald, R-Delano, a photographer who runs a portrait and commercial photography studio with his wife, accepted a $6,200 PPP loan that he said helped cover business costs and part of the salary of one employee.
The six-term lawmaker said his business saw a dramatic loss of revenue because the public health restrictions prompted by the pandemic temporarily shuttered his studio. It took time for clients to return, and at reduced volume.
McDonald similarly voted against that COVID-19 relief, saying in an interview that when he cast his vote, Minnesota was facing a projected budget deficit of more than $2 billion. His photography studio, which he has operated for three decades, received a $6,200 PPP loan.
“We had other ways that we thought would be better to help small businesses without further debt,” McDonald explained.
Messages seeking comment from other lawmakers who voted against the May relief package were not returned.
The others are: state Rep. Jeff Backer, R-Browns Valley, whose e-commerce business, Backer Wencel Incorporated, received $88,780; Rep. Dave Baker, R-Willmar, $52,790 for Mary Pat Hospitalities LLC; Rep. Debra Kiel, R-Crookston, $41,033 for her sugar beet farm, Keil Corporation; Rep. Ron Kresha, R-Little Falls, $154,600 for Golden Shovel Agency; Rep. John Poston, R-Lake Shore, at least $305,500 for 3 Cheers Hospitality LLC; and Rep. Paul Torkelson, R-Hanska, $23,375 for his farm.
At the time, House Republicans were pushing for Walz to end his peacetime emergency declaration and relinquish his emergency powers. Republicans in both chambers voted multiple times to strip Walz of his emergency powers but were unsuccessful because the vote needed approval from both chambers. The DFL-led House has steadfastly sided with the governor.
“What I personally was advocating for is opening up the businesses,” McDonald said.
In recent weeks, a surge in COVID-19 deaths, hospitalizations and infections prompted Walz to order a four-week shutdown of indoor restaurant dining, gyms and other businesses. He’s expected to announce an update on restrictions this week.
To help businesses stay afloat through the second round of closures, Minnesota lawmakers have been locked in negotiations over a COVID-19 relief bill, and a package could come up for a vote on Monday when the Legislature returns for its seventh special session this year.
The negotiations have been made possible by unexpected surplus dollars after the state budget agency earlier this month reported the current biennium had swung from a $2.3 billion deficit to a projected $641 million surplus.
On Thursday, Senate and House Republicans said they had reached agreement with Democratic leaders on $216 million in cash relief to Minnesota businesses.
House DFL leaders, meanwhile, say they are pushing for an extension of unemployment insurance benefits, as well as $500 payments to families in the Minnesota Family Investment Program, a welfare program for low-income families. Republicans have pushed back against both proposals.
The $216 million in cash relief for businesses that could be approved on Monday is a little more than half of what House Republicans initially proposed. They had previously sought $400 million for businesses.
For his part, McDonald said he is likely to be a yes vote given the improved fiscal picture, as well as the state’s rainy-day fund of more than $2 billion.
“It does make sense now at this point, since we’re looking at a surplus of money to help,” he said. “I’m always in favor of helping small businesses.”