Nearly a third of the $7 billion that Oregon businesses received through the Paycheck Protection Program went to 1,054 companies who account for just 1.6% of the state’s loan recipients, according to data released this week by the Small Business Administration.
In total, 66,100 Oregon businesses received potentially forgivable loans through the coronavirus relief program, with an average loan of $106,692.11. It’s not yet clear how many of those loans will ultimately be forgiven.
But even though the federal program was supposed to be geared toward struggling small businesses, 32.3% of the money that went to Oregon ended up in the hands of larger companies receiving loans of between $1 million and $10 million.
Economists say the program broadly achieved its purpose, shifting money from the public coffers to private businesses and nonprofits so they could keep their workers employed through the early days of the coronavirus recession.
Critics have complained, though, that too much money went to businesses run by well-connected politicos and owned by wealthy businesspeople who had other means to fund their organizations.
A number of publicly traded companies received funds, too, including Oregon-based Digimarc, which accepted $5 million from the program last spring. The Trump administration subsequently issued guidance that the loans weren’t intended for companies with access to the stock market but Digimarc was unapologetic, saying it used most of the money for payroll, the loans’ designated purpose.
The Oregon businesses that received the biggest sums came from a wide range of industries.
Six Oregon companies were approved for the maximum loan amount of $10 million: Erickson Air Crane, Pacific Office Automation, Swanson Group Manufacturing, Timber Products Co., McMenamins and Shari’s Restaurant. (See a full list of the Top 25 at the bottom of this article.)
Fifty-three Oregon businesses received loans over $5 million, while 20 received loans over $7 million.
The long list of loan recipients reads like a directory of Oregon commerce. Nearly every type of organization, from every part of the state, participated in the relief program.
Among the notables that received large loans were the restaurant chain Old Spaghetti Factory ($9.2 million), Pendleton Woolen Mills ($8.7 million loan), nonprofit Mercy Corps ($7.6 million) and artisan ice cream shop Salt & Straw ($4.5 million).
Powell’s Books received a loan of $4.1 million, Timberline Lodge received $2.7 million and Voodoo Donuts received $1.8 million.
Sentia Wellness, parent to the struggling Portland cannabidiol manufacturer Social CBD, accepted nearly $2 million.
Seneca Sawmill Co. received a loan of more than $7 million through the program but announced Thursday that it had paid off the loan with interest following the recovery of the lumber market.
And then there is Shilo Management.
The government provided $2.98 million to the Shilo motel chain and the entrepreneur behind it, Mark Hemstreet. Shilo has a paper trail of lender lawsuits, bankruptcies and foreclosures dating back a decade. Days after the PPP loan closed, Cathay Bank filed yet another lawsuit against Hemstreet and Shilo claiming they were long overdue repaying a $4.1 million loan.
Clearly, the PPP loans were not normal transactions. The point was to keep companies alive and employees employed.
And there’s no denying the hospitality business has been brutalized by the pandemic. Hotels all over the world have closed their doors or gone out of business completely as travel has come to a virtual halt.
But for Hemstreet and Shilo Management their financial jam dates back a decade or more, a span that includes multiple lawsuits, a bankruptcy, several foreclosures of hotel properties and a litany of other problems.
In the most recent lawsuit, Cathay has obtained a writ of garnishment against both Shilo Management and Hemstreet that will give the bank the ability to access their bank accounts.
Hemstreet’s lawyers said he declined comment.
In court papers, Hemstreet claimed the bank’s “unwarranted” efforts to get repaid may have been “motivated by unlawful discrimination” against him and “certainly deviated from any commercially reasonable conduct.”
Lawyers may not be the first group you think of when the topic is emergency pandemic aid. But plenty of Portland firms — at least 15 — applied for and got themselves a PPP loan.
Schwabe, Williamson & Wyatt, the second largest firm in the state, got more than $7.8 million, by far the largest sum of any local firm. Miller Nash Graham & Dunn borrowed $4.9 million.
Did these swanky corporate firms really need federal money?
Graciela Gomez Cowger, CEO at Schwabe, said it saved jobs at her firm. Along with cost-cutting moves, including “significant pay reductions” for attorneys and senior staff, Schwabe managed to “keep our team employed during this unprecedented time.”
Stoel Rives, the city’s largest firm, was notable by its absence from the list of PPP recipients. Penny Serrurier, the firm’s co-managing partner in Portland, confirmed it did not apply for a loan.
“Instead, we opted to work through the financial impact of the pandemic by taking other measures, including reducing our overhead costs while minimizing the impact on our employees,” she said. “As the year progressed we saw our business hold up well and recently we restored full compensation to all of our lawyers and staff, making them whole for the year.”
In a truly awful year for the restaurant and bar business, beer lovers can take some solace in the PPP spreadsheet. Craft brewers big and small borrowed money through the federal program.
McMenamins was one of a handful of Oregon borrowers to get the maximum $10 million. The company, now more of an operator of hotels and inns than just a brewer, briefly shut down its entire Northwest operations in the pandemic’s early days.
Other notable borrowers include Deschutes Brewery, which borrowed $5.9 million; Ninkasi in Eugene, which borrowed $1.2 million; and Portland stalwart Breakside Brewery, which received $763,700.
The vast majority of Oregon’s loans went to smaller companies requesting well under $1 million. A total of 31,435 loans, or nearly 48% of the loans issued to Oregon organizations, were for under $25,000.
Oregon businesses in the healthcare and social assistance industry received 13.5% of the money, while construction companies received 13.1%. The hotel and restaurant sector, which has been arguably the hardest hit of any industry during the pandemic, ranked sixth among industries receiving money, taking in 8.8% of Oregon’s allocation.
The Paycheck Protection Program was designed to help small businesses keep employees on payroll for several months during the heart of the pandemic. The program stopped accepting applications in August after distributing $525 billion in potentially forgivable loans to 5.2 million businesses nationwide.
The program has drawn criticism for a haphazard rollout that enabled fraudsters to access tens of millions of dollars in loans and for shelling out multimillion loans to large and established companies when the relief was supposed to be directed at struggling small businesses.
The new data released Wednesday showed that a quarter of the money distributed nationally went to 1 percent of borrowers, according to an analysis by the New York Times. About 600 businesses nationwide received the maximum loan amount of $10 million.
The Small Business Administration had previously provided the loan ranges and names of businesses who received more than $150,000 in aid, but released the names and exact loan amounts for all 5.2 million borrowers Wednesday after a lawsuit from 11 new organizations.
