In April, the board of 75F, a Twin Cities energy-management software firm, accepted then returned a $600,000 government loan to help retain employees who otherwise might be furloughed as business dropped by half amid the COVID-19 instant recession.

CEO Deepinder Singh said the company, which last year raised $18 million in growth capital, was in a better position than many struggling small businesses.

The board reversed itself recently, and accepted the U.S. Treasury-financed credit, as the Small Business Administration (SBA) expanded its $520 billion-and-growing Paycheck Protection Program loan initiative.

“We’ve been growing revenue by two to three times over the last three years,” Singh said. “This year, we expected to do 2.5 times last year’s revenue ... to more than $10 million. We will struggle to get to something around $5 million.”

“We’re not laying off any of our [118] people. We expect to lose several million dollars this year.”

Can’t blame a struggling business, even one with reserves, for tapping cheap funds to help survive a disastrous downturn that already has claimed scores of Minnesota stores, eateries and other small businesses.

Minnesota businesses have received $11 billion-plus in 1% paycheck loans issued by the SBA through lenders that are paid up to a 5% origination fee. The program is part of the small-business bailout plan that is just one of the federal stimulus efforts. The loans of up to $10 million are forgivable as long as 60% of the funds go to payroll and the rest to standard business expenses such as rent and utilities.

Some employers were critical of the PPP, especially retailers and restaurant owners, who say the government pressured them into rehiring furloughed workers when it started in April, even though there was no business. Congress and the SBA later allowed spending on more than wages, and extended the spending period to Aug. 8. Some employers also had to contend with workers who didn’t want to return when recalled because they were home with kids furloughed from school and making more on state unemployment payments plus $600 weekly from federal stimulus payments that expire this month.

The hospitality and travel industries are lobbying for hundreds of billions more in assistance to get them through what promises to be a long fall and winter without a miracle vaccine and economic recovery in 2021.

Hundreds of Minnesota employers received up to $5 million, including well-known names such as Christopher & Banks, Schuler Shoes, Innovative Office Solutions, Erik’s Bike, law firm Robins Kaplan and D’Amico restaurants.

Some recipient companies boast more than 500 employees, but used a loophole that allows businesses to count sites separately.

Rand Park, a professor at the University of Minnesota business school, noted that even the Ayn Rand Institute, the avowed anti-government-interference outfit, took $1 million.

“In ‘normal’ times, private companies … should not be bailed out by taxpayer money,” Park said. “But in a time of existential crisis, if those loans are made for the purpose of not simply protecting a single business, but for … propping up an entire economy, taking advantage of a government loan program is much more defensible.

“But a business that would take money it didn’t really need, simply because it was available, is probably not the kind of business that is truly worried about its reputation, vis à vis the greater good.”

Terry Fruth, a veteran business lawyer, recalled that the recovery from the Great Recession of 2008-09 was pretty slow because U.S. Treasury and Congress chose to bail out big banks first. President Barack Obama got about $800 billion to stimulate the economy in 2009-10 through infrastructure and other spending, a relative pittance.

The Trump administration, which posted an eye-opening $1 trillion deficit in a good economy in 2019, has already pushed the budget gap for the current fiscal year to $3.7 trillion, thanks largely to stimulus spending and falling revenue. The government is obligated to finance and repay debt holders for budget deficits.

Even private country clubs and well-endowed arts outfits are in on the action. Bearpath in Eden Prairie, Town & Country in St. Paul, Hazeltine National in Chaska and several others got hundreds of thousands apiece in PPP funds.

Tony Morse, a businessman and president of the Lafayette Club on Lake Minnetonka, said membership dropped last spring by 10% among its 600 “social members” who use the club for fitness programs. The club, which has revenue of several million dollars annually, has seen its dining-and-banquet business, which keeps it marginally profitable, slide off the table. The $350,000 loan allowed it to retain most of its 100 employees. Lafayette also sold land and an insurance policy to help survive what will be a money-losing year.

Doran Cos., one of the most prominent developer-builders of apartment complexes in the Twin Cities over the last decade, got $1 million in PPP money.

“We retained 95% of jobs and restored full-time status to employees who were initially furloughed,” said Doran CEO Anne Behrendt. “We also continued to pay full benefits to employees who were temporarily furloughed. “

Knutson, Weiss Builders, Shaw-Lundquist and a few dozen other local contractors received $150,000 to a few million dollars.

Breck and Blake, private schools that charge up to $34,000 for a year of tuition, got $5 million apiece. Administrators said fundraising for scholarships has taken a hit this year.

It’s tough all over, particularly for lower-paid workers who lost their retail-and-hospitality jobs. Ironically, labor analysts said last month that working folks, including those on unemployment, are spending all they got on food, utilities and housing. The affluent, who use discretionary funds for travel and entertainment, are holding back.


Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at