From Silicon Valley startups to Gavin Newsom’s wine business, a rundown of who got what from the federal coronavirus business loan program.
Organic farms, the governor’s winery group, a scooter startup and … Burning Man? The new list of California recipients of federal Paycheck Protection Program loans to ease economic fallout from the coronavirus is long, varied and sometimes bizarre.
The Small Business Administration effort “to provide a direct incentive for small businesses to keep their workers on the payroll” was created in late March and expanded by Congress in May to a $669 billion initiative to curb skyrocketing unemployment. Loans are eligible for forgiveness if certain criteria are met.
On Monday, as the program re-opened for another round of applications open through Aug. 8, the Treasury department released a detailed breakdown of who got what in the first round of the PPP. There are lots of intriguing line items, but even before the new data dump, loans to public companies and large chains fueled controversy over preferential treatment for entities that stretch traditional notions of small businesses. (CalMatters also applied for and received a small-business loan, which you can read about here).
Though much of the list is composed of exactly the types of low-margin or heavily seasonal industries one might expect — agriculture, construction, hospitality, nonprofits — there are several notable trends. Here are six of the most interesting:
1. The zero-jobs-saved club
For a program premised on saving paychecks, an awful lot of California recipients of PPP loans reported zero jobs saved as a result of the funding. About 4,750 companies and organizations that received $150,000 or more said zero jobs were retained.
There have already been reports of clerical errors on the massive government spreadsheet, but among those listed in the zero-jobs-saved category who received $5 million to $10 million are a company affiliated with Karl Strauss Brewing Company, staffing firm APR Consulting Inc., Il Fornaio restaurant group, KFC franchise group Great American Chicken and several other hospitality, health care and tech businesses.
2. Silicon Valley’s government gold rush
One sector famous for its deep pockets and over-the-top perks figures prominently on the list of PPP recipients: tech startups, and in particular those selling transportation services that have ground to a halt during lockdowns.
Santa Monica scooter startup Bird, which reportedly laid off more than 400 workers in a two-minute Zoom call this spring, is listed as a recipient of a $5 million to $10 million loan. But Bird denied it applied for a loan, adding to a growing list of companies that say they were erroneously listed. Also on the list are car-rental startups Turo and Getaround, electric vehicle startup Canoo and Bolt Mobility, which have cumulatively raised well over $1 billion in private funding.
A few venture capitalists are even on the list. A Sand Hill Road company affiliated with Andreessenn Horowitz, investor in companies like Facebook, Lyft and Airbnb, is listed as the recipient of a $350,000-$1 million loan. Index Ventures also makes an appearance, though the firm said on Twitter that it was listed in error.
3. Gubernatorial grapes
One company that received a relatively small loan of $150,000-$350,000 also attracted attention: PlumpJack Management Group, LLC, or the parent company of the Shakespeare-inspired wine business started by Gov. Gavin Newsom with investor and music composer Gordon Getty before the former was elected to state office.
When asked about his company’s cameo on the list during a coronavirus press conference, Newsom quickly dismissed the issue. “You would have to ask the people that are running those businesses,” he said. “It’s in a blind trust. Period. Full stop.”
4. Farm-to-table funding
While farm workers are still out working in fields across California, the economics of agriculture were turned upside-down by mass cancellations of restaurant and wholesale orders during state and local lockdowns.
A range of organic produce companies, like the Central Coast’s OrganicGirl and Lakeside Organic Gardens, plus dozens of smaller-scale producers, received loans of $150,000 to several million dollars. High-end restaurants like San Francisco’s Michelin-star State Bird Provisions also sought funding to stay afloat, and in that case trying to save 34 jobs.
5. Cal State campus support
With the state’s sudden $54 billion budget deficit, funding for education is one big question mark. So it might not come as a surprise that multiple entities associated with the California State University system applied for and received PPP loans.
A nonprofit corporation registered to Cal State L.A. received between $1 million and $2 million, and a similar organization at Cal State San Marcos got between $2 million and $5 million.
6. The outliers
The nearly 88,000 entries in the list of California PPP recipients also includes a few oddballs. Kanye West’s Yeezy clothing and shoe company got $2 million-$5 million. Same with the San Francisco nonprofit the Burning Man Project, the organizer of the annual Nevada desert rager that was cancelled this year because of the virus.
There are also many types of money managers represented on the list, venture capitalists aside. Anaheim’s Payday Loan LLC received $350,000-$1 million, while firms including Walnut Creek’s Destination Wealth Management and TSG Wealth Management of Long Beach received more than $1 million.