Of the 1,194 businesses in Mobile and Baldwin counties that were approved for loans of greater than $150,000 from the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) to secure jobs during the COVID-19 pandemic, only three totaled between $5 million and $10 million, according to data released Monday.
The PPP was designed to provide forgivable loans as a direct incentive for “small businesses with fewer than 500 employees” to keep their workers on the payroll for as long as eight weeks while the economy stabilized. The amount of the loan was equal to two months’ of a business’s average monthly payroll costs from the past year plus an additional 25 percent of that amount, subject to a $10 million cap.
Although criteria changed as the pandemic wore on, PPP loans were originally designed to cover payroll costs, most mortgage interest, rent and utility costs over the eight-week period after the loan was made. If employee and compensation levels are maintained, the loans are entirely forgivable and won’t have to be repaid.
Announced in late March and available in early April, $349 billion initially allocated to the program was exhausted in just 13 days to provide loans to more than 1.6 million applicants nationwide. Congress bolstered the PPP with an additional $321 billion in late April and as of June 30, more than $521 billion has been awarded to nearly 4.9 million applicants.
Upon releasing the data, SBA noted businesses listed have been approved for a PPP loan by a delegated lender, but “the lender’s approval does not reflect a determination by SBA that the borrower is eligible for a PPP loan or entitled to loan forgiveness.” All PPP loans are subject to SBA review and all loans over $2 million will automatically be reviewed, the agency added.
According to the data, one of the three largest local recipients was Mobile’s Continental Aerospace Technologies, a subsidiary of Aviation Industry Corporation of China (AVIC), which is owned by the Chinese government and reports more than 80,000 employees worldwide and assets north of $250 billion. Continental is among the largest manufacturing employers in the Mobile area, according to the Mobile Area Chamber of Commerce, and its PPP application notes 464 jobs were retained with the loan, which totaled between $5 million and $10 million.
The two other local companies approved for the largest tier of PPP loans were Felder Services LLC, which provides janitorial services such as sanitation, and Norton Lilly International Inc., a global logistics company and shipping agent. They reported the number of jobs retained as a result of the loans as 500 and 413, respectively.
Meanwhile, 39 companies in Mobile and Baldwin counties received PPP loans of between $2 million and $5 million, according to the data. Among those is Seger Aero Corporation, another global aerospace company, which reported 114 jobs retained in Fairhope in its PPP application. Private educational institutions including Spring Hill College, the University of Mobile and UMS-Wright received loans of more than $2 million, as did large employers in Baldwin County including Brett-Robinson in Gulf Shores, Flowerwood Nursery in Loxley and Vulcan Inc. in Foley.
Many employers on the list, including Flowerwood Nursery, did not report any employees retained as a result of the loans. Likewise, Bay Energy Group LLC, which lists an address on Old Shell Road and whose scant internet presence indicates it is “an energy systems optimization company” and solar equipment provider, only filed a certificate of formation with the Alabama Secretary of State in 2016.
A phone number listed for the business connected to the voicemail of an individual, and a message left for more information was not returned before press time.
Another relatively newly formed company that received more than $2 million through the PPP was Criteria Construction LLC. Secretary of State records show it was formed in October 2019, but a website for Criteria Development, which shares the same physical address in Daphne, claims the company builds DR Horton subdivisions and “closed its first project in Louisiana in early 2016.” It listed 195 jobs retained as a result of its loan.
A total of 97 companies in Mobile and Baldwin counties received PPP loans of between $1 million and $2 million. Among those were PCH Hotels and Resorts, which is owned by Retirement Systems of Alabama, a state pension plan with more than $38 billion in assets; The Park at OWA, owned by the Poarch Band of Creek Indians; Cunningham Bounds law firm; and four other private schools: Bayside Academy in Daphne and St. Paul’s Episcopal School, Faith Academy and McGill-Toolen Catholic High School in Mobile, although the latter three reported themselves as nonprofits.
Other religious organizations benefiting from the program include the Archdiocese of Mobile, 3Circle Church, Christ United Methodist Church and CityHope Church. Several prominent nonprofit social services in the area, including Franklin Primary Health Center, Volunteers of America, ARC of Baldwin County and Mobile Community Action, were approved for loans of more than $1 million.
Another 45,049 companies in the two-county area received loans of less than $150,000 through the PPP, according to SBA, but they weren’t listed by name. Remarkably, a total of 324,327 jobs were reported as “retained” in Mobile and Baldwin counties through the PPP loans, although the Alabama Department of Labor indicates the total civilian labor force in the two counties was only 281,952 in March.
The PPP was set to expire on July 3, but with hours remaining, President Donald Trump signed a bill approved by Congress extending loan applications though Aug. 8.
On Tuesday, Sen. Doug Jones said the PPP has been adequately administered, but not perfectly administered.
“Remember this program was designed to keep businesses afloat and keep people on the payroll and by and large it has done just that,” he said. “There’s 660,000 folks in Alabama that have benefited from the PPP, so we see it has been very, very good, but there have been abuses. We now have an inspector general in place to try to ferret those out … and if we need to get money back, I think we’ll have to do that. Overall, I think it’s been a success. But if fraud was committed, they need to be prosecuted. At a very minimum, if people got it when it wasn’t designed to help them, we need to get that money back one way or another.”
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