Over 3,800 churches, charter schools, restaurants, retailers, builders and even a golf course operator in Gilbert got low-interest, forgivable loans totaling between $384 million and $610 million from the federal government’s Paycheck Protection Program to stay afloat during the initial months of COVID-19’s economic meltdown.
Data released last week by the Small Business Administration shed some light on what Gilbert businesses and other entities received from among the 4.9 million PPP loans totaling $521.5 billion that the agency so far has approved nationwide to help save jobs.
The PPP loan funds – described by the SBA as “a direct incentive for small businesses to keep their workers on the payroll” – are part of the $2 trillion pandemic relief package approved by Congress in March that also included other assistance to individuals, businesses and local and state governments.
The loans comprised the largest portion of the multi-aid effort, accounting for $670 billion, or 26 percent, of the total package. About $120 billion has not been spent and the deadline for applying for the money has been extended to Aug. 8.
Arizona’s share of the PPP money totaled between 6.5 billion and $12.5 billion.
The reason that estimate is so broad involves weeks of pressure by Congressional Democrats and government watchdogs for the SBA to release more data on how it was using billions in taxpayer dollars.
The data that the SBA released last week sought to strike what Treasury Secretary Steven Mnuchin called an “appropriate balance of providing the American people with transparency, while protecting sensitive payroll and personal income information of small businesses, sole proprietors, and independent contractors.”
On the one hand, the agency data omits the identity and addresses of 3,387 Gilbert entities receiving loans under $150,000, totaling $225 million.
But the SBA did identify recipients of loans $150,000 and above – including 448 in Gilbert – but did not give a specific amount.
Instead, it put each recipient in one of five categories of loan ranges: $150,000-350,000, $350,000-1 million, $1-2 million, $2-5 million and $5-10 million.
The 3,835 PPP loans in Gilbert ranged in size from $3,250 up to loans in the $2 million-$5 million range.
The Gilbert loans under $150,000 ranged from a high of $149,200 for a limited liability company in 85297 that stated it would retain 38 jobs to $3,250 for a limited liability company in 85296 that supported one job.
Not all the applicants stated how many jobs their loans will help support.
The 448 Gilbert loans over $150,000 totaled between $159 million and $385 million.
Among those recipients was Caretaker Landscape and Tree Management, which said its loan will support 250 employees, according to the SBA data.
Another landscaping company, 2B’s Enterprises DBA Terra Verde Landscape Solution received $1 million-$2 million to retain 130 employees.
A handful of Gilbert churches also received larger loans.
Sun Valley Community Church, claiming 222 employees, got $1 million to $2 million, as did East Valley Bible Church for a reported 138 workers.
Loans ranging between $350,000 and $1 million went to Christ’s Greenfield Lutheran Church, with 113 employees, and Mission Community Church, with 31 employees,
Christ Church, with 27 employees, and St. Anne Roman Catholic Parish, with 21 workers, each obtained $150,000-$350,000.
Private and charter schools in Gilbert also received loans with the largest, between $1 million to $2 million, going to Gilbert Christian Schools to retain 234 employees.
Schools that received $350,000 to $1 million included San Tan Montessori School, which claimed 88 employees; Leading Edge Academy, with 72 employees; and Lead Charter Schools, with 74.
Loans totaling between $150,000 and $350,000 were awarded to Creo Montessori, with 31 employees; Ball Charter School, with 39 employees; and CAFA Charter School. CAFA, a performing arts school, did not indicate how many employees the loan will support.
Additionally, charter providers Daisy Education Corp., with 110 employees, and Sonoran Schools, with 135 employees, each got $1 million-$2 million. Both are housed at the same location.
Also in that range was a loan obtained by Lauren’s Institute for Education, which claimed 281 employees serving children with developmental disabilities.
A number of medical clinics, dental providers, veterinarian places, pool companies, CPAs, auto repair shops, real estate businesses, manufacturers and a good number of builders also turned to the loan program.
Among 15 Gilbert building trades companies was Hunter Contracting, which builds residential, highway and industrial projects and has 249 employees; it received $2 million to $5 million.
Bjerk Builders, which employs 90 people and builds medical and dental offices, received $1 million to $2 million while M. Greenberg Construction, which handles public and commercial projects and has 22 employees, got $350,000-$1 million.
Several restaurants also received larger loans.
FX4B, LLC, which owns Arby’s eateries, received $2 million to $5 million to retain 500.
In the $350,000-$1-million range are Backyard Taco, 99 employees; Arizona Wilderness Brewing Company, with 97 employees; William Johnston’s Homestead Restaurant Ventures, which owns eateries like Joe’s Farm Grill and The Coffee Shop at Agritopia and employs 49 people and OHSO Brewery, with 123 employees; and The King and Eric, LLC, or Pita Jungle, with 62 employees.
Loans between $150,000 and $350,000 went to Osaka Japanese Steakhouse, with 25 employees; Blue Wasabi, with 43; Blue 32 Sports Grill, 20; Fox Cigar Bar, 27; High Tide Seafood Bar, 67 employees; 5C Restaurants or Sal’s Gilbert Pizza, 32; Blue Adobe Santa Fe Grill, 300 employees; Venezio’s New York Style Pizzeria, 58.
Loans also went to Nando’s Mexican Café, which listed Nando’s of Gilbert, LLC with 66 employees; Nando’s of Queen Creek, LLC, with 72 employees; and Nando’s of Chandler, LLC with 56 employees. All three listed 3519 E. Baseline Road as their corporate address and each received $150,000-$350,000.
And, Rainbow Cotton Candy with 27 employees got a $150,000-$350,000 loan.
Sunset Pizza and Sunset Subway, both listed with the same address, received $150,000-$350,000 for each business. Sunset Pizza claimed to have 70 employees while Sunset Subway claimed 64.
A number of auto dealers also got loans.
Loans between $2 million and $5 million went to Henry Brown Auto Group, with 258 employees, and San Tan Auto Partners, with 247.
Bill Luke SanTan, with 153 employees, obtained a loan for $1 million-$2 million while Horne Motors, with 65 employees, and Earnhardt Volkswagen, with 60 employees, each borrowed $350,000-$1 million. Thrifty Car Sales, with 15 employees, received $150,000-$350,000.
Personal service providers that received loans of $150,000 to $300,000 included OMG Nail Salon for 35 employees; Wright Touch Two, a massage business, with 18 employees; and TG San Tan Salon. San Tan did not indicate how many employees it had.
Other recipients included nonprofit Your 10 Life Foundation, which offers leadership training and has 11 employees, $150,000-$350,000; Scapebook.com with 75 employees, $350,000-$1 million; USA Gymnastic and Dance Center, with 44 employees, $350,000-$1 million; Zinke Dairy Farm, with 47 employees, $350,000-$1 million; and Royal Arabians horse breeding with 31 employees, $150,000-$350,000.
Copper Springs Retirement Community received $150,000-$350,000 for 20 employees and Lindsey Square Senior Living got $150,000-$350,000 but did not indicate the number of employees it had.
Park Place Communities management for mobile homes received $150,000-$350,000 to retain 52 employees.
Thompson Golf Groups, which operates three locations, including in Gilbert’s Trilogy Golf Club at Power Ranch received $1 million-$2 million and claimed 161 employees.
For some of the recipients, it wasn’t clear what services they provided because there was no company website and the Arizona Corporation Commission paperwork does not offer much insight.
For example, #Denverstrong, LLC, which has an address to a private home in Gilbert, listed 48 employees and received $150,000-$350,000.
Daily Burnouts, LLC, also with a private home address, listed 12 employees and received $1 million to $2 million.
As more loans prepare to go out, the U.S. Government Accountability Office has raised concerns of potential fraud.
“Because of the number of loans approved, the speed with which they were processed, and the limited safeguards, there is a significant risk that some fraudulent or inflated applications were approved,” the government watchdog agency reported.
It added that the SBA’s effort to quickly disburse funds allowed lenders to rely on borrower certifications to determine eligibility, raising the potential for fraud.
The agency recommended that the SBA develop and implement plans to identify and respond to the program’s risks and address potential fraud.
There’ve been a few publicized cases so far of people accused of fraudulently obtaining or misusing the PPP loans.
The U.S. Attorney’s Office in the Northern District of Georgia announced in June the federal grand jury indictment of Maurice Fayne, a reality TV actor who owns a trucking company and stated he employed 107 people with an average monthly payroll of $1.5 million.
He asked for $3.7 million and eventually was approved for $2 million. Within days of receiving the money, federal officials allege, Fayne used $1.5 million to buy jewelry, lease a Rolls Royce Wraith, make loan payments and pay $40,000 in past child support payments.
A Texas man was charged with making false statements and money laundering over his PPP loan.
Fahad Shah, who owned a wedding planning company, is accused of submitting fake applications with fraudulent documentation asking for over $3 million to two different SBA-approved lenders. He claimed to have over 120 employees when at the time he had no employees, federal officials said.
Shah ultimately received over $1.5 million in PPP money and allegedly used it for personal expenses, such as buying a Tesla, personal investments and home-mortgage payments, according to the release.
Although the SBA stated it can audit a PPP loan of any size, Forbes Magazine interviewed an expert who noted it was unlikely for smaller loans after the Treasury and SBA “have indicated that for loans under $2 million the borrower will have been considered to have made the certification that the loan is necessary due to economic uncertainty in good faith.”
However, the Treasury Department later said any loan could be subject to an audit.
While Mnuchin in a news release said PPP loans supported over 51 million jobs nationwide, the U.S. Bureau of Labor Statistics last week reported 17.8 million people are unemployed in the country. According to the Pew Research Center, unemployment nationally hit a higher peak in three months of COVID-19 than it did in two years of the 2008 Great Recession.
Initial evidence of the PPP’s impact on the economy found no evidence that it “had a substantial effect on local economic outcomes – including declines in hours worked, business shutdowns, initial unemployment insurance claims, and small business revenues – during the first round of the program,” according to an 86-page working paper released by the National Bureau of Economic Research
The SBA said loans will be forgiven if at least 60 percent goes to payroll, although the rest of the money can be used for basic expenses like mortgage interest or rent and utilities.
The loans, which carry a 1 perceent interest rate and require no collateral, also had no fees since the government covered lenders’ costs.
The SBA stressed that forgiveness “is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.”