SALT LAKE CITY — Utah Gov. Spencer Cox and state leaders were considering being the backstop for short-term, emergency loans from Zions Bank to help Utah’s tech sector pay their employees in the wake of the Silicon Valley Bank  (SVB) collapse.

It’s similar to what the federal government did with PPP loans during the COVID-19 pandemic. A bank administers the loan, and the state makes sure that the bank doesn’t lose any money if loans aren’t paid back.

“That was never agreed to, we talked about what that would look like but never got to the point,” Governor Spencer Cox told KSL NewsRadio. He was asked whether the state was assuring the bank that they would be protected if loan money didn’t come back to them. “That was one of the requests, but that was never approved.” 

One member of his Office of Economic Opportunity said the state “would backstop up to a certain amount” of these potential loans in an interview with KSL NewsRadio.

This past Saturday, an emergency task force convened at the governor’s request. The state’s entrepreneur-in-residence with the Office of Economic Opportunity, Brad Bonham, told KSL at Night that the 10 p.m. call included roughly 15 people, each with different government, business, and banking interests.

Bonham said ultimately, it was Zions Bank who offered to help as the SVB crisis deepened.

“[They were] so gracious in offering to administer some sort of a program where we would backstop up to a certain amount that they would put together in kind of a short-term lending package for these businesses,” said Bonham. “It was all centered on payroll though, we just didn’t want people — all these different employees across the entire state not getting paid. The businesses had the money they just had no access to the money.”

A safe bet

State leaders believed the move would be a safe bet, something Cox signaled in his comments Thursday.

“We assumed that the assets of SVB would be purchased by another bank, but we knew it would take time,” Cox said.

The potential loan program was being created just days before Zions Bank would face public worries over a potential credit rating downgrade when Moody’s Investor Service put it and several other banks on potential a watch list. Chairman and CEO of Zions Bancorporation, Harris Simmons, later said that wasn’t worrying him.

In a statement to KSL NewsRadio, Zions Bank said it was “offering to help support the tech community however we could assist.”

“At the time there was a concern for the local Utah companies who may not be able to make payroll and other short-term obligations without access to their deposits at SVB. We were ready to step in to help with special assistance if needed,” the bank said. 

Bonham also said the goal of that lending plan was to quickly get money to companies that needed to make payroll. 

“Saturday night to Monday we had to figure out how cash into these businesses pockets and do it quickly and in a way where we can track it and be accountable,” Bonham said. “And that part isn’t necessarily I think what government really excels at. And so [we needed to find] a partner in the private sector.”

Ultimately, this loan program wasn’t needed. Sunday night, the federal government announced SVB depositors would be made whole.

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