How Stanislaus’ $832 million in COVID relief helped the county’s smallest businesses
Leave it to a global pandemic to test the limits of the saying “Every little bit helps.”
Last spring, as the Central Valley and the entire nation reeled from the COVID-19 pandemic, relief money began to flood into the area from the federal government. The much lauded, and also maligned, Paycheck Protection Program began doling out forgivable loans of up to $10 million dollars to businesses small and not-so-small across the region.
But the data on the smaller businesses — those receiving less than $150,000 from the Treasury Department-supported program — was not released until late last year. The more complete release of PPP information paints a clearer picture of who got what in Modesto and across the valley.
With loans ranging from a few hundred dollars to a few million, the program has given out a total of more than $832 million to Stanislaus County businesses, according to data from the Small Business Administration that has been reviewed by The Bee.
Over 6,900 businesses in the county have been approved for PPP loans as of March 3 of this year, per the most recent data available. The program also is said to have saved nearly 100,000 jobs in the region, based on information provided by the applicants.
Loans for smaller, new Stanislaus businesses often small
Among the smaller dollar recipients was Contentment Brewing, a craft beer brewery just off downtown Modesto nestled behind the junior college campus. Opened in the summer of 2019, the fledgling business had been operating for six months when the pandemic struck.
Married owners-and-operators Abena Darden and Alejandro Serrato were among those who applied for forgivable PPP loans, one of the highest-profile government small business pandemic relief efforts. But because of their relatively new status, they were only approved for $3,454.
Designed as loans to help small businesses keep employees on their payroll, PPP money is calculated based on the average monthly cost of the salaries of all employees.
Darden said they were able to use the amount to pay for one payroll period with their PPP funding. Last month, she was able to get their loan forgiven, a keystone part of the program’s appeal. She said, despite their small payout, she would still have applied. She called both the process to apply for the loan and get it forgiven “straight-forward.”
“I would absolutely recommend it, especially if you have a longer time frame you can show. It’s a good program,” Darden said. “In hindsight I’d probably do it again, initially, even though it was such a small amount. (Because) if everything else fails, at least we can pay our staff one more time.”
Paying staff through the PPP loan, as well as operating a food truck and offering outdoor dining and growler fills all helped Contentment Brewing to avoid shutting down entirely as state-wide restrictions forced many businesses to close their doors.
Valley businesses can still apply for new PPP funding
A new round of PPP funding became available starting Jan. 11, and the incoming Biden Administration has tailored it to help more genuinely small mom-and-pop businesses like Contentment Brewing. The program had a special enrollment period for businesses with less than 20 employees, and continues to encourage smaller businesses to apply.
The original program, which launched last summer, was open to small businesses with 500 or fewer employees. Loans ranged from under $1,000 up to $10 million. In Stanislaus County, a large number of loan-getters were businesses in the food processing and agriculture industries. Manufacturing and restaurants — including cafes and bars — also received a sizable percentage of the money.
Overall, California has received over 255,843 loans amounting to $21.702 billion, according to SBA data that includes all approvals through March 7.
Katy Winders, the director of the Valley Sierra Small Business Development Center, said that during the first round of applications, she spoke to a number of business owners who chose not to apply for the money because they felt other employers needed the funds more than they did.
With second-round funding now open, Winders said she and her team — as well as other organizations and lenders across the county — have been able to encourage some of those business owners to apply for funding after all.
The PPP program re-opened in January, allowing businesses who hadn’t previously applied for a loan to access funding. At the same time, the SBA launched a “second-draw” category, where businesses who got funding last time can apply for more. Both these applications will be open until March 31.
The program currently has $128 billion still available to borrowers through the end of the current cycle, and there are no plans to re-open applications once the month ends. On March 3, a coalition of business groups sent a letter to lawmakers through the U.S. Chamber of Commerce, urging them to extend the program through Dec. 31 of this year.
Winders said those applying for “second-draw” funding are finding the process simple, in part because their banks and lenders already have their information on file.
Some Stanislaus companies could get second PPP loan
Additionally, eligible hospitality establishments can apply for secondary loans calculated at 3.5 times their monthly payroll, up to $2 million. First time borrowers are eligible for up to $10 million. These increases for hospitality businesses — including restaurants and hotels — are designed to support industries hit among the hardest by the pandemic.
Winders said targeted relief like this is welcome, but she hopes to see the increased funds expanded to other industries besides hospitality, “but of course they have to figure out you know who is affected the most.”
“Overall, the program has been very helpful to the majority of our business,” she said. “It has allowed them to pay themselves, especially our sole proprietors and our independent contractors, to pay their bills they’ve also been able to pay their team.”
Now, Winders said, she and her team are also helping business owners with applications for loan forgiveness. If they meet certain criteria, they can have their PPP loans forgiven and effectively turned into grants. After some initial confusion regarding forgiveness among applicants and lenders, that process has also been running more smoothly, she said.
Still, for some small business owners, the chaotic rollout and their small first-draw sums have made the prospect of applying again daunting.
Adriana Mejia, owner of Klassy Cuts hair salon in Ceres, got a grand total of $747 from her PPP loan application. The salon owner and independent contractor was closed for about five months on-and-off last year as the personal service industry remained shuttered to combat the COVID-19 outbreak.
But even though she would be eligible for a second draw, she is wary of trying again.
“I wouldn’t try because it was a hassle doing all that for what they gave me,” said Mejia, who has owned Klassy Kuts for 11 years. “We’re hanging on, but we’re struggling right now.”
Roughly half of county’s PPP recipients in Modesto
In Stanislaus County, loan distribution has been in line with the county’s economy, which is heavy in manufacturing and agriculture. The smallest dispersed payout to the date, according to the SBA data, was $364 which went to a sole proprietor in Hughson. The largest dispersed payout was $10,000,000 which went to Modesto’s Pacific Southwest Container.
In total, the county received $832.182 million in PPP loans, with $76.620 million undisbursed as of March 3. Of those loans, 3,563 went to businesses based out of Modesto. The city received $434.278 million in funding, $40.863 million of which remains undisbursed.
Countywide, 1,467 businesses receiving grants are part of SBA-designated Historically Underutilized Business Zones (HUBZones), a program that helps small businesses gain preferential access to federal assistance opportunities. In Modesto, 925 PPP recipients were in designated HUBZones.
PPP loans are expected to save over 96,000 jobs in Stanislaus County, 48,000 of which are in Modesto.
Data for PPP loans is partially incomplete, as businesses and lenders self-report most of the information that the SBA tracks, including the number of jobs that will be maintained through the loan. Additionally, data for those businesses who received under $5,000 in loans is current only through Feb. 1, but has been added to the overall totals.
U.S. Rep. Josh Harder, D-Turlock, said the PPP program has been “very important” to the Valley and its small businesses.
“I’ve heard from so many business owners across our community that have told me they would have had to consider closing or going bankrupt if they didn’t receive the PPP,” Harder said. “I’ve heard from a lot of workers that know that they would not have been continuing to get a payroll paycheck if that program had not been instituted.”
He said the proof of the program’s success, despite its rocky initial rollout and issues with a lack of transparency about who exactly was receiving the loans, lies in the tens of thousands of jobs saved across his district.
Harder said despite the program’s challenges, the benefits to businesses have been crucial.
“Think about the devastation that would have resulted and how much worse things would be,” Harder said. “It’s good that we were able to get the help and then we need to continue to advocate ... to make sure people can continue to make it through this.”
For the owners of Contentment Brewing, their relatively small PPP loan still helped, even if it only covered one payroll period. The couple also successfully applied for and received an $8,000 grant from Stanislaus County as well as a traditional loan through the SBA. In total, they received about $36,000 in grants or loans for COVID-19 relief.
Darden said they opted not to apply for second draw because of some of the requirements make it more difficult for them to qualify. The brewery had five employees, but scaled back after the second stay-at-home order from late last year. They’ve survived through growler fills when dining was shut down and their patio seating when outside dining was allowed.
“It’s been about being creative. We started bottling... We’ve also partners with Visit Modesto for a growler campaign,” Darden said. “But the support from the community, that’s really how we’ve been able to survive.”
This story was produced with financial support from the Stanislaus Community Foundation, along with the GroundTruth Project’s Report for America initiative. The Modesto Bee maintains full editorial control of this work.
To help fund The Bee’s economic development and children’s health reporters with Report for America, go to https://bit.ly/ModestoBeeRFA
This story was originally published March 15, 2021 at 4:00 AM.
