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Have the federal payroll relief loans helped them survive the pandemic? Wine Country firms weigh in

Of all applications processed, North Bay banks shelled out 93 loans of $2 million to $5 million to regional businesses. The program provided $5 million to $10 million loans to 18 local businesses. See the list of recipients disclosed so far.

As a business operator, what would you do if the government handed you $2.5 million?

That’s what Stockham Construction owner Boyd Stockham grappled with. His business was among the 4,100-plus North Bay companies that participated in the U.S. Small Business Administration’s Paycheck Protection Program, which doled out $1.4 billion in local COVID-19 economic relief.

But Stockham, who originally applied through his bank for the loan to help support 550 workers, had a change of heart.

“For my company, $2.5 million is a speck in the sand. It’s not going to do anything for me. We just returned the money,” Stockham told the Business Journal, calling the process “a paperwork nightmare.”

The North Bay Business Journal contacted a sampling of 50 businesses listed on government-provided reports of organizations that borrowed $2 million–$5 million. The government did not list the names of North Bay companies that received loans under $150,000.

Download: Named North Bay companies and organizations that received SBA PPP loans over $150,000

The data reveals the number of jobs saved as a result of the loans averaged 200 to 300 employees supported. Stockham’s company’s workforce represented the high end, but all levels of staffs were assisted with the relief. But in the sampling of 50 companies, the data listed zero jobs for some, while others didn’t even list the numbers.

Moreover, in a review of a sampling of 500 loans that amounted to under $150,000 and listed without company names, 5.2% of that sampling’s line items indicated retaining zero jobs. The space was left blank for another 5.2% in that sampling. North Bay businesses including nonprofits, limited partnerships and corporations that applied for these smaller loans raked in $674 million earmarked to support 75,169 jobs.

The national data indicated that 875,000 borrowers were listed as saving zero jobs, which calls into question the accuracy of the information released, the Washington Post reported. For example, the SBA claims to have supported more jobs than the total employment in at least 15 industries. Phone calls to the SBA were unreturned.

Nonetheless, of the seven companies the Business Journal reached, the number of jobs retained by them was at least in the ballpark of the people they employ.

The 1% commercial loans offered as the feds’ incentive to maintain staffing levels among companies across the nation represents a $660 billion effort to combat Depression-level unemployment due to the COVID-19 outbreak. The SBA forgives the loans, if the company pledges to keep at least three-quarters of its staff on board.

But Stockham, whose Cotati construction company employs about 550 people, weighed whether to keep the money and pay for his staff to stay on board for about two weeks or have the ability to furlough some workers with the idea of bringing them back later. His thoughts were: If he used the money and it quickly ran out, there may be no company to return to.

As U.S. Treasury Secretary Steve Mnuchin entertains the idea with Congress on whether to provide a blanketed forgiveness on all those loans, Stockham is dealing with the aftermath of trying to keep his workforce on the job. The workforce has dwindled down to 400, and he’s witnessing a “softening” of the number of jobs coming out of San Francisco — his cash cow. In the meantime, the essential nature of industries such as health care is keeping the company churning with projects.

“It would have been a nice injection, but I’d have rather helped my workers out by offering bonuses. You’d think the federal government would look at companies like this and help the guy who’s responsible for a lot of people,” he said. “But you and I could drink 10 bottles of wine and a ton of beer and talk about it until we’re blue in the face, but it wouldn’t matter.”

His next step revolves around keeping as many people busy and employed enough to get into 2021. After that, it’s anyone’s guess how the coronavirus outbreak will evolve.

Trying to keep the organization healthy

Hospice by the Bay Chief Financial Officer Denis Viscek received and kept the loan to maintain his Larkspur agency’s financial solvency.

Viscek glanced at history to make the critical decision to sign on for a $6 million loan to save 399 jobs.

In the last dozen years alone, the North Bay hospice agency has endured the financial effects of the Great Recession in 2007–2009, the retooling needed to accommodate the Affordable Care Act implementation, the ongoing Medicare challenges, the regional wildfires over the last few years and now a global pandemic.

Of all applications processed, North Bay banks shelled out 93 loans of $2 million to $5 million to regional businesses. The program provided $5 million to $10 million loans to 18 local businesses. See the list of recipients disclosed so far.

And for the health care industry, residual impacts hidden below the surface may cause more headaches for public health and agency finances.

“If someone has cancer and they’re scared (of catching the virus) and not going to see a doctor, how do we know if they’re even at the end of their life?” Viscek asked. Hospice agencies provide comfort and pain management to those nearing the end of their lives.

For now, the first order of business is caring for people, while “avoiding the rocks under the surface,” the CFO said of coronavirus pitfalls such as securing personal protective equipment for his staff. “We’re in pretty good shape, if our supply lines don’t get broken,” he added.

“We applied to keep everyone employed,” he said. “We feel we can get through 2020. But beyond that, it becomes cloudier.”

Viscek has considered passing on asking the federal government for forgiveness on the PPP loan.

“There’s great uncertainty around this,” the financial chief said.

To him, the million-dollar question remains: “How bad will it become?”

Staying energized through the crisis

Other Marin County businesses outside of the health care industry have also discovered operational costs have risen since the coronavirus outbreak.

Kevin Bradley of W. Bradley Electric in Novato told the Business Journal the $5 million his company borrowed has been critical to his operation — because it’s essential. Bradley pledged to retain his staff of 274 employees.

“We work in construction and use PPE because we’re cleaning more. We’re trying to recoup our costs for the existing contracts we have,” he said.

The chief electrician is concerned because his flagship project types are weakening, so he’s seeking “vertical” markets in government at the city local and state levels.

“We won’t know the impact four to five months from now. We just don’t know what the future holds,” he said.

The construction industry has found itself in a quandary of needing to be accessible and fighting to stay alive in these uncertain times.

SBA data glitch leads to social media storm

For some, it’s tempting to just hang a “gone surfing” sign up at the front door — especially when dealing with all the hiccups stacking onto the blatant challenges of COVID-19’s economic impact.

Boyd Meacham, who owns Spurgeon Painting in Petaluma, said his SBA loan has helped a lot, if not for a social media backlash.

Proof of at least occasional inaccuracies of the data revealed by the SBA, Meacham’s $250,000 PPP loan intended to keep his 16 employees on the job turned into a $2 million to $5 million mistake after an accounting error was released publicly.

“I almost signed this loan at the bank. I had to correct it. This would have been fraud,” he said.

Spurgeon Painting’s Facebook page lit up with negative comments questioning why the small operation needed so much.

For now, Spurgeon Painting has remained busy with both residential and commercial jobs. As many workers stay home, they elect to have their living rooms and kitchens repainted.

“We have a very full calendar for now, and we continue to work very hard to keep a backlog (of jobs),” Meacham said. “But if I had to look at my crystal ball, I could be surfing in Baja. We’ll see what the winter brings.”

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