CORRECTION: An earlier version of this story posted online the morning of July 7 relied on data provided by the U.S. Department of Treasury and U.S. Small Business Administration that indicated it represented the number and amount of loans granted to thousands of borrowers as part of its Paycheck Protection Program relief, accompanied by a press release that said: “This disclosure covers each of the 4.9 million PPP loans that have been made.” What wasn’t noted by the federal agencies is that the data referred solely to the amount the borrower was approved to receive, not what they actually borrowed. A bank and borrower could have agreed on a smaller loan, and a borrower could have used less or given back the loan in its entirety. That information isn’t available in the data. In the earlier story, Zel Technologies LLC of Hampton was listed as being among the 17 Hampton Roads firms to have received a loan worth $5 million to $10 million. Instead, Zel officials say it was approved for a $6 million loan but ultimately borrowed only $500,000 because the company decided it didn’t need the larger amount. The story below has been corrected to note that the information refers to approved amounts.
A federal loan program intended to help small businesses as they struggled to survive and pay their employees amid the COVID-19 pandemic appears to have brought millions of dollars to large or well-known Hampton Roads companies.
They were among 16,173 businesses across Virginia to be approved for a Paycheck Protection Program loan worth at least $150,000, according to data released Monday by the U.S. Department of Treasury and U.S. Small Business Administration. In Hampton Roads, more than 2,500 loans were approved for that amount and above. The 1%-interest loans have the potential to be entirely forgiven. Many approved for at least $1 million include notable area law firms, developers, property managers, health care providers, auto dealers and military contractors.
According to the database, the largest loans, worth $5 million to $10 million, were approved for just 17 businesses in Hampton Roads:
- Bayview Physician Services in Chesapeake
- BurgerBusters Inc. in Virginia Beach
- Clark Nexsen Inc. in Virginia Beach
- Colonna’s Shipyard Inc. in Norfolk
- Divurgent LLC in Virginia Beach
- EVMS Academic Physicians and Surgeons Health Services Foundation in Norfolk
- ICI Services Corp. in Virginia Beach
- LGS Management Group Inc. in Virginia Beach
- Lombart Brothers Inc. (now known as Lombart Instrument) in Norfolk
- MHI Hospitality TRS LLC in Williamsburg
- PBMares LLP in Newport News
- Tecnico Corp. in Chesapeake
- Tidewater Physicians Multispecialty Group Inc. in Newport News
- Virginia Oncology Associates in Norfolk
- W.M. Jordan Company Inc. in Newport News
- Warwick Plumbing and Heating Corp. (now known as Warwick Mechanical Group) in Newport News
- Zel Technologies LLC in Hampton
What the data released this week doesn’t make clear is how much money each entity actually received and spent, despite the federal agencies making it sound as it did in an announcement when the information was released, saying: “This disclosure covers each of the 4.9 million PPP loans that have been made.”
At least one borrower, Zel Technologies, says it was approved for a $6 million loan but ultimately borrowed only $500,000. “We decided that we did not need the original amount to support our operations and we were also concerned that accepting that amount could deny funds to other worthy PPP applicants,” said Sherri L. Crawford, the company’s general counsel.
It was March 25 when Gov. Ralph Northam, like other governors, banned elective surgeries to preserve space and equipment in hospitals as the pandemic took hold.
For Bayview Physician Services in Chesapeake, that meant a slowing business coming to a complete halt overnight for more than 300 workers in its groups, including physicians, surgeons and nurses.
CEO Jim Hartz said the PPP loan and a line of credit helped bridge payroll costs and other eligible expenses when there was no other revenue coming in, and they were able to ramp up a new telehealth system. Within a week, via virtual medical visits, they were back up to about 60% of their usual outpatient visit traffic.
He said the loan was particularly timely and necessary to help with cash flow as they had to quickly and completely change their business operations, to account for the safer-at-home rules.
“It was a safety net bridge that definitely helped,” he said.
While the provider group has typically grown 10% each year, that won’t be happening in 2020, Hartz said, and he doesn’t expect a return to normal business until, perhaps, the second quarter of next year.
John R. Lawson II, executive chairman of the construction firm W.M. Jordan Co., said the loan his company received was worth a little more than $5 million.
“We have a very big payroll,” he said. “And that’s what it’s for.”
He said it helped the company keep its employees despite delays in projects affected by the pandemic, including job sites closed for multiple days to sanitize. The sites that were able to remain active weren’t as productive, he said, making costs rise.
“We would have had to lay off people” without the loan, Lawson said. “In some cases, we may have even had to delay projects.” He noted that the company hadn’t reduced anyone’s pay or benefits, either, and had retained more than 300 people.
The company has also been hiring.
He said the company has seen one or two contracts canceled entirely because of the pandemic’s effects.
“I think the program has helped the economy incur less damage than it would have otherwise,” he said.
As of June 30, the federal government had approved nearly 4.9 million loans worth $521.5 billion through banks as part of a massive relief package amid the COVID-19 pandemic.
The first phase of funding ran out within days and the program has been criticized for allowing large enterprises that might have had the wherewithal to find funding elsewhere, including large restaurant chains and publicly-traded companies, to get approval for loans.
Among local borrowers, according to the data, was BurgerBusters Inc., one of the largest franchisees of Taco Bell locations in the country with 140 locations spread out across five states, according to a career site discussing the company. In 2016, that company received a $118.2 million loan to refinance its debt. Company officials did not return a call and email seeking comment Monday.
With the release of the data Monday, the federal agencies cheered the program.
“The PPP is an indisputable success for small businesses, especially to the communities in which these employers serve as the main job creators,” said SBA Administrator Jovita Carranza, in a statement after releasing the data. Treasury Secretary Steven T. Mnuchin in the same statement said the program provided “much-needed relief to millions of American small businesses, supporting more than 51 million jobs and over 80% of all small business employees, who are the drivers of economic growth in our country.”
Database by staff writer Moss Brennan