SHEBOYGAN – Sixteen days after laying off 85% of its employees, Sheboygan-based sock maker Wigwam Mills received a federal loan of $ 1.6 million to keep employees during the COVID-19 pandemic.
Data released by the U.S. Treasury Department earlier this month says wigwam’s loans helped keep 145 employees, but a wigwam manager told the press that only about 40 employees were on the payroll last week after some With the loan recovered from layoffs were money.
Wigwams Loan was one of approximately $ 5 million Paycheck Protection Program loans created under the $ 2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Congress passed in March.
Julie Van Engen, vice president of finance at Wigwam, said the company turned down an initial PPP loan in April because it would have had to spend 60% of the loan on payroll within eight weeks for the loan to go, and it wouldn’t thought I could spend so much. For the pay period ending April 11, the company had no full-time employees at its distribution center. At the end of April and the beginning of May, only a remaining team was on duty there to process orders.
Wigwam resubmitted after Congress extended the award period to 24 weeks in late May, listing 145 employees based on year-end 2019 staffing.
On May 20, prior to reapplying for a PPP loan, Wigwam sent a state and federal release notice stating that 121 of 142 employees would be permanently laid off for “the negative effects of the COVID virus on operations and the sale of wigwam ”. . “The layoffs went into effect on June 1st.
Wigwam launched its second PPP application on June 8th and received funding on June 17th. The lender, BMO Harris, declined to comment on the story.
Wigwam brought back some of the workers laid off in early June, Van Engen said. 40 employees were on the last payroll on July 24th, which means around 100 employees have not been brought back.
Van Engen said the blow to retailers in recent months has hurt Wigwam, but the PPP loan bridges the cash flow gap and allows them to bring employees back sooner than they otherwise could have done.
Despite the loan, there is still a lack of demand for the company’s products, Van Engen said, so Wigwam does not want to bring back employees or buy raw materials to make products that won’t sell.
“We didn’t want to make socks to put on shelves when there was no demand,” she said.
The money from the PPP loan can only be used for certain expenses such as payroll, rent, mortgage, interest and insurance. Van Engen said at the end of the 24 weeks Wigwam will either have to return the excess loan or extend the loan. Companies are required to provide documentation of how the money was used to qualify for a forgiveness.
“We have no intention of using this money for anything other than what it can legally be used for,” said Van Engen.
If a company is unable to spend 60% or more of the loan on payroll, loans are granted with a 1% interest rate and a six month grace period.
Wigwam expects to use 60% of the loan to cover payroll over the 24 weeks, Van Engen said. She added that 60% of the loan wasn’t nearly enough to cover the payroll of 145 employees for the entire 24 weeks.
While Congress debates extending the loan program in a new stimulus package, the use of PPP loans has been scrutinized given the rush of the program and the large amount of taxpayer money that is at stake.
The full effects of PPP are not yet measurable, but the national unemployment rate improved from 14.7% in April to 13.3% in May and 11.1% in June.
As of July 24th, more than 5 million PPP loans had been approved, according to the Small Business Administration, who refused to comment on the story. The Great Lakes Region, made up of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin, received 742,034 PPP loans totaling just over $ 87 billion. Companies in Wisconsin made just under $ 10 billion of this.
Applications for PPP should be completed by the end of June, but the program has been extended as there was more than $ 130 billion in available funds.
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Reach AnnMarie Hilton at [email protected] or (920) 242-3032. Follow her on Twitter at @hilton_annmarie.