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A Lexington coal company got millions in virus relief as many smaller businesses wait

Lexington Herald-Leader logo Lexington Herald-Leader 4/29/2020 By Daniel Desrochers and Will Wright, Lexington Herald-Leader

It is extremely rare that Crossings, a bar in downtown Lexington, closes its doors to the public. It’s open seven days a week, including on Christmas, Thanksgiving and Easter. When the bar closed for a staff party one Monday last year it was the first time it had been closed in years, said owner Rebecca Richter.

Everything’s different now. The point of a bar is to gather a crowd and, as crowds have been forbidden to help stop the spread of the coronavirus, Crossings has been shuttered since March 15.

It’s one of the countless small businesses across Kentucky trying to survive until the pandemic passes.

To help small businesses like Crossings, the federal government initially injected $349 billion into a loan forgiveness program for small businesses called the Paycheck Protection Program. They are loans with 1 percent interest that the federal government will forgive so long as 75 percent of the money is used for payroll and the business doesn’t fire or cut the salaries of its employees.

Within two weeks, that $349 billion had been claimed. An additional $310 billion was approved last week and started being disbursed Monday.

In Kentucky, 23,797 businesses secured loans worth $4.1 billion in the first round. While there is no list of the businesses who received loans, Crossings was not among them. Neither was Able Engineering, a small Lexington based company with nine employees.

Luther Andal, the co-CEO of Able Engineering, was frustrated by the process. He blamed the big banks — his bank is PNC — for not prioritizing true small businesses (the federal government’s definition of a small business varies, but it is generally businesses with fewer than 500 employees) and helping their bigger customers first.

“They were never going to get to us because they didn’t have enough time,” Andal said. “And, frankly, they strung us along.”

One of those bigger businesses that received money was Ramaco Resources, a publicly traded coal company valued at more than $100 million that’s based in Lexington but has no mines operating in Kentucky. Ramaco received an $8.4 million loan — one of only 4,412 companies across the country that received a loan larger than $5 million through April 16, according to the U.S. Small Business Adminstration. The mining industry as a whole received 11,618 loans for a total of $3.8 billion, according to the same data.

Coal companies have been considered essential businesses by the U.S. Department of Homeland Security from the outset of the pandemic, meaning they have not been forced to shutdown mining operations.

While some mines temporarily closed during the early weeks of the outbreak, others have rumbled on, and the industry’s requests for broad relief from the federal government have so far gone unanswered.

Declines in energy consumption and manufacturing have landed the already-unstable industry on even shakier footing.

Energy consumption in the U.S. fell to a 16-year low in early April, making the coal that burns in coal-fired power plants less valuable. Demand for metallurgical coal, the type of coal Ramaco produces for use in the steel-making process, has also dropped.

Raw steel production, industrial manufacturing and light vehicle manufacturing are all slowing down significantly because of the pandemic, according to the latest market report from the American Iron and Steel Institute.

In March, the National Mining Association, the coal industry’s leading lobbying group, asked lawmakers for help. They wanted the federal government to cut fees that help fund the Black Lung Disability Trust Fund, which provides financial relief and health care to miners inflicted with black lung disease, and the Abandoned Mine Lands Fund, which allows states to pay for the reclamation of abandoned mine sites.

Lawmakers declined their request, but multiple black lung organizing groups in Kentucky and Virginia, fearful that renewed efforts could be more fruitful, penned a letter to congressional leadership arguing that a cut on the black lung excise tax could put the fund in jeopardy. It is already billions of dollars in debt.

Meanwhile, Ramaco found its relief elsewhere, in the $8.4 million PPP loan.

Other businesses that are small by definition but large to the naked eye — the Los Angeles Lakers, Shake Shack and Ruth’s Chris Steakhouse — have pledged to return their money.

Ramaco, which had a net profit of $24 million in 2019 and $25 million in 2018, did not respond to a request for comment. The company reported having 395 employees at the end of 2019.

Andal said the fact that larger businesses were able to get loans while many smaller businesses were shut out was the “travesty of the whole thing.” He said a bigger portion of the money should have been set aside for very small businesses.

“You can’t be fair to everyone,” Andal said. “I get that. What’s not fair to me is we weren’t even given an opportunity.”

Andal was particularly angry at his bank. He said the online application PNC set up had several glitches and sent an email after a week asking for more documents. For the next round of loans, he’s using a community bank because several of his friends who used local banks had their loans processed.

Richter, who uses PNC and said the branch manager she uses has been helpful, is sticking with the big bank. She’s gotten an email that says Crossings is still in the queue and will get the loan when the money is available.

There are 25 people who work at Crossings and Richter said she’s fortunate because most of her inventory won’t go bad (only three already opened kegs). She’s bleeding about $7,000 a month in rent, utilities and insurance, but said she’s all right for now.

Richter said people have reached out and offered to donate to the bar to help it stay in business (Crossings is a staple in Lexington’s LGBTQ community). Instead, the bar raised more than $1,000 for Moveable Feast, a charity that brings meals to people living with HIV, by livestreaming a couple of karaoke and drag shows.

“I’ll be happy if we get the loan,” Richter said. “If it doesn’t happen, we’ll figure it out.”

Even as the state starts to plan for a phased reopening, bars aren’t among the businesses that will be allowed to open their doors anytime soon. Beshear said Monday they wouldn’t be able to open until June at the earliest.

“It’s probably one of the businesses where precautions aren’t going to be as effective,” Richter said. “Because the more jolly and the more drunk you get, the less likely you are to pay attention.”

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©2020 the Lexington Herald-Leader (Lexington, Ky.)

Visit the Lexington Herald-Leader (Lexington, Ky.) at www.kentucky.com

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