A word with Jeff Huhn of First Interstate Bank

As First Interstate’s southern Idaho market president, Jeff Huhn provides guidance to local business owners on many financial matters, including how to find funding for future business plans. In this Q&A, Huhn shares how Idaho’s small businesses can secure the necessary funds to take advantage of economic growth in the wake of COVID-19. (This Q&A has been edited for length and clarity.)

Q: What do you see as the biggest challenge Idaho’s small businesses will face as they try to find funding for their 2022 business plans?

We’re seeing two main challenges play out across the industries we serve in Idaho. The first major challenge is recruiting new employees and paying them appropriately, given the overall demand for employees. In addition, the cost of raw materials and supplies has gone up significantly. The COVID pandemic created constraints in the global supply chain, causing local businesses to pay more and wait longer for supplies. The challenge of appropriately funding the workforce coupled with increased costs to manufacture and deliver products can be difficult for small businesses to overcome.

The good news is that funding from financial institutions right now is abundant. Community banks across the state — and across the nation, for that matter — have ample deposits on their books, and those deposits need to be deployed in loans. It follows that there is a lot of loan funding available to small- and medium-sized businesses. Access to capital is how many businesses can resolve these challenges.

Q: With many parts of Idaho’s economy ramping back up, are there any business sectors that you feel will have a harder time than others? Or perhaps easier?

It appears that all parts of Idaho’s economy are ramping back up fairly quickly. That said, there are a few industries that are having a harder time. Restaurants and businesses in the broader tourism space are seeing difficulty in hiring new employees. Commercial office real estate also has plenty of question marks, given the uncertainty around how quickly and to what extent employees will return to offices. With so many companies and people becoming accustomed to work-from-home practices, it’s difficult to assess the demand for office space going forward.

It’s certainly not all bad; consumer demand is rising for products and services across nearly all sectors of the economy. One of the shining stars of the regional economy, of course, can be found in residential real estate. More and more people from in-state and outside Idaho are moving to the Treasure Valley. Homebuilders, real estate agents and home lenders are all benefiting.

Q: Are there areas of the state that you see are ramping up better or worse than others?

From our perspective here, all areas of Idaho are rebounding. In some cases, so well that it presents challenges. Mountain communities like Ketchum, McCall and even Coeur d’Alene have seen corresponding increases to housing costs. This is making it harder for local businesses to find and hire employees in locations where many can’t afford to live.

The drought the state is going through is also an area of concern. The true extent of the problem is yet to be determined, but areas like Canyon County, or places in southern Idaho like Twin Falls and Jerome, are already preparing for lower yields. It could put significant pressure on the region’s agricultural producers.

Q: Where can small businesses seek alternative sources of financing post-PPP loans?

First, I’d advise any business to make sure they have a strong relationship with a banker. Whether you are looking for a traditional loan or government-guaranteed financing with partnership from the SBA or USDA, a bank is going to be involved in that loan no matter what. The government relies on community banks to deliver financing from emergency programs to qualified businesses. Your banker will know what programs are available and can guide you in getting your business the capital it needs.

Even though PPP funds are now exhausted, there are other available programs that may help qualified businesses. For example, the SBA’s Economic Injury Disaster Loans provide economic relief to small businesses and nonprofit organizations currently experiencing a temporary loss of revenue due to a declared disaster. These loans would be appropriate for businesses impacted by the recent drought. Another program to consider is the Shuttered Venue Operators Grant program, which is reserved for theaters, live music venues, talent representatives, as well as some museums, zoos and aquariums that can show a revenue drop of at least 25%.

Q: Are these loans and grants available to all businesses? Are there any restrictions?

While these programs aren’t available to every organization, the number of small businesses that qualify for government-guaranteed loans is broader than many realize. As an example, the Shuttered Venue Operators Grant program also applies to businesses like talent agencies impacted by closed venues. Ultimately, you should work with your banker to see which programs your organization may qualify for.

Q: What recommendations do you have for how small businesses can best shift from survival planning to long-term growth planning?

Many of the tactics companies used to get through the pandemic can be applied to long-term growth plans. We’ve seen firsthand how businesses can learn and grow from past recessions and difficulties. They figure out ways to be more efficient and better manage their finances, and typically they are better prepared for the next inevitable downturn.

You can see this in remote workforce practices and technology; a lot of companies have learned how to function with most of their employees working from home. Many employees will return to the office in some capacity, but this technology isn’t going away. In fact, it’s already being applied to post-pandemic business initiatives, improving employee productivity, sales efforts and vendor relationship management.

Access to capital is the critical difference between success and failure at many of these companies hit by a sudden and unexpected shock. It could be cash they have on hand or potential access to funds, like a line of credit. Whatever growth plans businesses have in place, it’s always important to have access to capital before it is needed. Taking steps now when these resources aren’t needed, so they are indeed available in a time of crisis, could determine the survival of an organization.

Q: What do you envision post-pandemic consumer behavior will look like, and how will that affect Idaho’s businesses?

We’re already seeing signs that post-pandemic consumer behavior is much stronger. The numbers back this up, but all it takes is one look out my office window to see more and more people eating at restaurants, shopping and getting back to pre-pandemic buying patterns.

That said, consumers have some new habits. They have become accustomed to eating at home, and they are increasingly reliant on products shipped right to their doorsteps. Idaho businesses should be prepared to accommodate this new consumer behavior, meeting customer needs both online and in person.

It’s something we’ve had to do ourselves here at First Interstate. The pandemic encouraged the adoption of digital signature technology to have clients sign PPP loan documents. While that was out of necessity to get funds to companies as soon as possible, we’re continuing to use that technology in the normal course of business because it is what our clients now expect.

Q: As a whole, how do you think Idaho’s post-pandemic economic recovery for businesses looks? Are you optimistic — cautiously or otherwise?

We’re optimistic. I believe Idaho has shown a tremendous amount of resilience and has bounced back faster than most states. In many ways, Idaho was put on the map by our positive response and growth figures; now a lot of people are looking to come to Idaho to live, retire or start and grow their own businesses. All of that bodes well for Idaho’s future.

Q: What areas do you see as ripe for growth in Idaho, where current (or future) business owners could see great success?

Our bankers are seeing a lot of growth in industrial manufacturing and distribution industries. In the past, Idaho was unfairly viewed as somewhat remote and small, so companies didn’t invest significantly in distribution capabilities here. That has started to change. Large companies like Amazon have kicked down that door and shown the value of that investment, and this has encouraged similar investments in distribution here in the region. Savvy entrepreneurs should be able to take advantage.

It’s also worth highlighting the growing list of successful tech companies that call Idaho home. Some recent high-profile acquisitions of Idaho-based companies, like Kount, Cradlepoint and TSheets, demonstrate that our home is a great place to start and grow a technology company.

Whatever the venture, we’re looking forward to helping these entrepreneurs get the financing they need to take advantage of Idaho’s post-pandemic growth.