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Many Tampa Bay small businesses left out as $349 billion relief fund drained

The Paycheck Protection Program made 1.6 million loans. That sounds like a lot — until you remember that the U.S. has 30 million small businesses.

TAMPA — Founded in 1905, the Columbia Restaurant is old enough to have survived the deadly Spanish flu pandemic a century ago.

This time, the Columbia Restaurant Group lined up a federal Paycheck Protection loan before the massive coronavirus relief program burned through $349 billion in less than two weeks.

The Columbia isn’t revealing the size of the loan, but said that a 25-year relationship with Valley Bank played a key role in securing the lifeline.

“You find out who your true friends are when times are challenging,” said Columbia chief marketing officer Michael Kilgore.

Since the Paycheck Protection Program launched on April 3, having a friendly, familiar banker has made the difference for many of the 1.6 million businesses that secured loans, much of which can be forgiven if it is spent on line items such as payroll during the next two months.

In what turned into a first-come, first-served Darwinian scramble for cash, well-banked companies swooped in. Meanwhile, mom and pops with little more than a business checking account were left on their own to struggle with glitchy application websites.

Related: Uncertainty surrounds debut of $349 billion Paycheck Protection Program

Making 1.6 million loans might sound like a lot, but there are 30.2 million small businesses in the United States. That mismatch means losers far outnumber winners. On Friday, the website covidloantracker.com, launched by a couple in Miami, reported a 5.5 percent success rate for the 10,448 Paycheck Protection applicants that had taken its survey. Of those that received a loan, 81 percent said they had a pre-existing lending relationship with the bank.

The loans are meant to cover two months of payroll and other operating expenses. They do not require borrowers to put up any collateral or provide personal guarantees. But they must be repaid within two years at 1 percent interest if businesses do not keep employees, or quickly hire back the ones laid off at the start of the crisis.

The loans are capped at $10 million and are targeted at small businesses and nonprofits with fewer than 500 employees. That said, U.S. Small Business Administration rules allow larger companies in hundreds of different industries — some with as many as 1,500 employees, others that meet specific revenue criteria — to apply for loans. Times Holding Co., which operates the Tampa Bay Times and affiliate publications, received an $8.5 million loan.

Nationwide, loans went to some companies that might not sound like small businesses. One was the Ruth’s Chris Steak House chain, based in Winter Park, which employed more than 5,000 people and made $42 million after expenses last year. Working with JPMorgan Chase Bank, which assigned bankers to walk clients through the process, the company secured loans for two of its subsidiaries totaling $20 million.

Shake Shack, Potbelly Sandwich and Taco Cabana, restaurant chains with hundreds of stores and thousands of employees, likewise got $10 million each with help from Chase.

Millions more went to a nuclear waste management company in Atlanta, a Denver kombucha bottler, an Arizona chain of chiropractic clinics and a range of manufacturing, health care and technology companies, some small, some not. Construction companies, which need a lot of loans for their projects and thus have close relationships with their banks, had secured 13 percent of the money loaned, the largest share.

‘People are hurting’

Left out were most small businesses.

“That’s super frustrating because I could use a few thousand, so we could survive a few more weeks,” said Steven Peterman, who is trying to keep paying a staff of five at Pete’s General store and bakery in St. Petersburg.

Pete's General is at 495 Seventh Ave. N in St. Petersburg. (Google street view) [Google street view]

“We’re asking for chump change compared to what they’re getting,” said Dan Linden, general manager of the 28-employee Express Trailers in Clearwater. But he’s not surprised, considering that bigger companies have teams of professionals to jump on opportunities like this. “I can’t blame them, but it’s unfortunate that all of us little guys are at the mercy of the scraps that are left.”

U.S. Rep. Kathy Castor, D-Tampa, said she was surprised when a Tampa Bay Times reporter told her that Payroll Protection loan recipients included restaurant chains employing thousands of workers.

“I do not want major businesses crowding out what is intended to be an initiative that serves small businesses," Castor said.

"That’s more important in the Tampa Bay area than just about anywhere else,” she said. “We don’t have a lot of Fortune 500 companies. We’re a small business community, and people are hurting. We’ve got to get these funds out and replenish it as soon as possible.”

But efforts in Congress to allocate a second round of $250 billion in Paycheck Protection funding have stalled as Democrats demand more money for hospitals, states and cities, and supplemental food program recipients.

Florida ranked third in the nation for the number of loans (88,997) and fourth for the total amount of money received ($17.8 billion), according to the Small Business Administration. California and Texas were first and second. New York had fewer loans but a larger total dollar amount. Loans averaged $206,000, and 74 percent were for less than $150,000.

The night before the funds ran out, U.S. Treasury Secretary Steve Mnuchin said the Small Business Administration had “processed more than 14 years’ worth of loans in less than 14 days.”

It was no exaggeration. Typically, the agency’s primary lending program for banks does $23 billion in loans per year. With the Paycheck Protection Program, it averaged more than $24 billion in loans per day.

Nearly 5,000 lenders made loans through the program, and some banks made a point of putting their best clients first. Bank of America initially told business customers that it would focus on helping clients who had previously borrowed money from the bank, then broadened the pool amid the backlash.

Related: Bank of America broadens Paycheck Protection applications after clients hit block

In Tampa, Valley Bank worked with new clients, but prioritized existing ones, said Chris Kneer, a senior vice president. The bank already had their information, which helped speed up the application process, allowing more clients to get loans before the money ran out.

In a normal year, Valley Bank does $50 million to $70 million in Small Business Administration loans. Asked if the bank did that much in the last two weeks, Kneer chuckled.

“More than a billion,” he said. At last tally, Valley had processed 5,000 loans worth nearly $1.5 billion. More than 3,000 more loans were still active in the pipeline on Thursday.

“Three hundred and fifty billion sounds like a lot, but we knew it would go fast,” Kneer said. The volume of applications, he said, was “something we have never seen.”

Top industries

Construction

$44.9 billion (13 percent of the total)

Professional, scientific and technical services (includes lawyers, accountants and architects)

$43.2 billion (12.6 percent)

Manufacturing

$40.9 billion (12 percent)

Health care and social assistance

$39.9 billion (11.6 percent)

Accommodation and food service

$30.5 billion (9 percent)

Retail trade

$29.4 billion (8.5 percent)

Source: U.S. Small Business Administration.

Top states

Texas — 134,737 loans for $28.4 billion

California — 112,967 loans for $33.4 billion

Florida — 88,997 loans for $17.9 billion

New York — 81,075 loans for $20.3 billion

Illinois — 69,893 loans for $15.9 billion

Source: U.S. Small Business Administration.

Loans by size

The Small Business Administration said 74 percent of the loans were for less than $150,000 and that the average loan size was about $206,000. Here’s how the money was split up among loans of different sizes:

$150,000 or less — 1.2 million loans for $58.3 billion (17 percent of total funds)

$150,000 to $350,000 — 224,061 loans for $50.9 billion (14.9 percent)

$350,000 to $1 million — 140,197 loans for $80.6 billion (23.6 percent)

$1 million to $2 million — 41,238 loans for $57.2 billion (16.7 percent)

$2 million to $5 million — 21,566 loans for $64.3 billion (18.8 percent)

More than $5 million — 4,412 loans for $30.9 billion (9 percent)

Source: U.S. Small Business Administration.

Who got the money?

Typically described as a program for small businesses with 500 or fewer employees, the Paycheck Protection Program does allow for loans to some larger companies, too. No complete public list is yet available, but U.S. Securities and Exchange Commission filings from publicly traded companies have disclosed these loans:

$20 million to two subsidiaries of Winter Park-based Ruth’s Hospitality Group, which runs the 150-restaurant Ruth’s Chris Steak House chain, with more than 5,000 employees. (JPMorgan Chase Bank, commonly known simply as Chase, made the two separate $10 million loans.)

$10 million to Shake Shack of New York City. The popular burger, fries and frozen custard chain has 7,600 employees and owns more than 160 restaurants across the U.S. The Tampa Bay area’s first Shake Shack is scheduled to open in Midtown Tampa next year. (Chase)

$10 million to the Potbelly Sandwich Shop chain. The Chicago company has more than 470 shops in 32 states, including one in Florida at Tampa International Airport, and about 6,000 employees. (Chase)

$10 million to Taco Cabana, a fast-casual restaurant chain with more than 160 restaurants based primarily in Texas. Taco Cabana’s parent company, Fiesta Restaurant Group of Dallas, also owns Pollo Tropical and between the two companies has more than 10,000 employees. (Chase)

$10 million to Hallador Energy, a Terre Haute, Ind.-based coal mining company with 915 employees. (First Financial Bank)

$8.2 million to Air T of Denver, N.C., whose 769 employees handle a range of aviation products and services. (Minnesota Bank & Trust)

$6.9 million to New Age Beverages Corp., a Denver producer of teas, kombuchas, bottled water, liquid dietary supplements and cannabidiol (“CBD”) topical products, with 934 employees. (East West Bank)

$6.5 million to Legacy Housing Corp., the fourth-largest producer of manufactured homes in the United States, with offices in Bedford, Texas, and about 800 employees. (Peoples Bank)

$6 million to Kura Sushi USA of Irvine, Calif., which has 25 restaurants, one in Florida, and about 1,400 employees. (Bank of the West)

$5.7 million to Perma-Fix Environmental Services, a nuclear waste management company in Atlanta with more than 250 employees. (PNC Bank)

$5.6 million to sporting goods manufacturer Escalade Inc. of Evansville, Ind. (Chase)

$5.2 million to Misonix of Farmingdale, N.Y. Misonix has 125 full-time employees who design, make and market minimally invasive therapeutic ultrasonic medical devices. (Chase)

$5 million to Sifco Industries of Cleveland, Ohio. Sifco’s 400-plus employees make highly engineered forged aircraft and engine components for the aerospace, energy and defense markets. (Chase)

$4.9 million to MannKind Corp., of Westlake Village, Calif., which has 233 employees who develop inhaled therapeutic products for patients with diseases such as diabetes and pulmonary arterial hypertension. (Chase)

$4.8 million to CPI Aerostructures of Edgewood, N.Y., a 230-employee manufacturer of structural assemblies for fixed-wing aircraft, helicopters and airborne intelligence surveillance and reconnaissance pod systems. (BNB Bank)

$4.6 million to Natural Gas Services Group of Midland, Texas, which has 270 employees. (Chase)

$3.6 million to PolarityTE MD Inc., a Salt Lake City company with more than 150 employees who design and develop regenerative tissue products and biomaterials to be used in medicine, biomedical engineering and material science. (KeyBank National Association)

$3.2 million to Adamis Pharmaceuticals of San Diego. The company’s 131 employees develop therapeutic products for respiratory disease, allergies and opioid overdoses. (Arvest Bank)

$2.9 million to Identiv, a Fremont, Calif., based company with more than 300 employees working on radio-frequency identification (RFID) technology used in security and access control. (East West Bank)

$2.9 million to CRH Medical Corp., based in Vancouver in Canada, which provides doctors across the United States with products and services to treat gastrointestinal diseases and has 395 employees.

$2.73 million to The Joint Corp. of Scottsdale, Ariz., which has a network of more than 500 chiropractic clinics, including 30 in Florida. The company has 150 employees. Its franchisees are independent operators, so their employees are not its employees. (Chase)

$2.4 million to computer software company Oblong Inc. of Conifer, Colo. (MidFirst Bank)

$1.8 million to RiceBran Technologies, a specialty food ingredient company with 121 employees and offices in The Woodlands, Texas. (Spirit of Texas Bank)

$1.77 million to Blonder Tongue Laboratories of Old Bridge, N.J., a 93-employee manufacturer of technology for telecommunications, broadcasting, entertainment and media.

$1.6 million to Bsquare of Bellvue, Wash., which has 139 employees and develops and deploys Internet of things-enabled systems. (Chase)

$1.4 million to AutoWeb, a digital marketing platform focused on auto sales with offices in Tampa and 171 employees. (PNC Bank)

$656,830 to Dallas-based Rave Restaurant Group, which has 275 Pie Five and Pizza Inn restaurants and 45 employees. (Chase)

Source: U.S. Securities and Exchange Commission. Employee totals generally are taken from each company’s most recent annual report.

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