PPP loans aid local businesses, but surge in COVID-19 cases creates more uncertainty
The cast, crew and staff members at North Coast Repertory Theatre in Solana Beach were preparing to raise the curtain on “Human Error,” a play about two couples at opposite ends of the political spectrum, when the COVID-19 pandemic struck.
With a loan somewhere between $150,000 and $350,000 from the Paycheck Protection Program, a federal coronavirus relief measure, North Coast Rep was able to retain a production assistant, costume designer, artistic director, actors, box office staff and all of its other employees at full pay throughout May and June. The nonprofit theater salvaged its production by making a Zoom recording for ticketholders.
“We took a pretty sizable financial hit,” said David Ellenstein, North Coast Rep’s artistic director, referring to the public health restrictions on indoor gatherings that ended the theater’s revenue-generating events. “The PPP loan helped a lot for us to remain in some semblance of normalcy.”
More than 750 Solana Beach businesses and other organizations have been approved for PPP loans so far, according to data released earlier this month by the Small Business Administration, including 107 of at least $150,000. A new PPP application period is currently open for applicants who have not yet received a loan.
Leaders at many local organizations said PPP was a critical lifeline. But many of them have already burned through that funding and face more uncertainty as public health restrictions tighten again in response to growing COVID-19 case numbers.
By July, North Coast Rep furloughed half its staff and cut pay by 20% for those who remained.
“We’re trying to be creative and trying to make some lemonade out of the lemons, but the lemons are going to get more and more tart as time goes on,” said Ellenstein, adding that the theater is hoping for more relief from the federal government.
Following multiple public records requests and lawsuits by news organizations that were seeking data on PPP loans, the SBA on July 6 released the names of all organizations that were approved for at least $150,000 through the program. The data shows the range of the loan amount that each one was approved for: $150,000 to $350,000; $350,000 to $1 million; $1-2 million; $2-5 million; or $5-10 million.
A spokesperson for North Coast Rep said the theater doesn’t want to disclose exactly how much it received. Exact loan amounts granted to other local organizations reported below were confirmed by officials from each one.
The SBA identified businesses that received less than $150,000 only by business type (for example, whether they are a corporation, LLC, sole proprietorship, etc.), but did include the exact amounts of loans they were approved for.
PPP loans were made by Zions Bank, Bank of America, Wells Fargo, U.S. Bank and other lenders, and are guaranteed by the SBA. An SBA news release said 4.9 million loans, at an average of $100,000 each, have been granted.
It’s unclear how many jobs have been saved by PPP. The SBA data includes a “Jobs Retained” field for each organization, but some entered zero or left it blank when they applied. According to the SBA, PPP applicants did not have to specify how many jobs they would be retaining in order to get the loan, but they will have to verify that information to qualify for loan forgiveness.
Restaurateur Bertrand Hug echoed the call for more federal assistance. He said a PPP loan of $275 million to Mille Fleurs, his French bistro in Rancho Santa Fe, enabled him to reopen in May after closing in mid-March. The loan has since run out, but the restaurant is still open for takeout and outdoor dining.
There have been 308 PPP loans approved for Rancho Santa Fe businesses and other organizations, SBA data shows.
Hug said he projects that a separate loan of $765 million for his other restaurant, Mister A’s in downtown San Diego, will last through August.
“Unless they come back with another PPP for the hospitality industry, there are going to be closures like we’ve never seen before, permanent closures,” he added.
Over 500 organizations were approved for PPP loans in Del Mar. The state-owned Del Mar Fairgrounds, which faces a dire financial forecast after canceling the county fair and other large events that generate most of its revenue, received $4.7 million. Even with the loan, fairgrounds staff announced July 14 that about 90 of the venue’s 150 employees will likely be laid off in the coming months.
The Del Mar Thoroughbred Club, which operates horse racing at the fairgrounds, furloughed half of its 250 employees in April, including administrative staff, marketing representatives, security guards and janitorial staff. It brought everyone back in May after receiving a $2.8 million PPP loan and proceeded with the summer race meet without fans in attendance.
DMTC, a quasi state-run organization that pays all its profits to the fairgrounds, was already struggling before the pandemic with declining revenues due to increased public scrutiny of safety standards throughout the horse racing industry.
“Without the PPP loan it was questionable whether or not we could have made it through and could have operated this year,” said Mike Ernst, DMTC’s chief financial officer. “We just didn’t have any funds.”
Ernst said this year’s races were expected to generate approximately $16-17 million in attendance-related revenue before COVID-19. Now DMTC is hoping for a boost from online wagering to help carry it into 2021, when the fairgrounds will host the Breeders’ Cup.
Local schools approved for PPP loans include Diegueno Country School, Santa Fe Christian Schools, Encinitas Country Day School and The Winston School.
Dena Harris, Winston’s head of school, said a $404,200 PPP loan helped retain special education faculty, a marriage and family therapist, counseling staff and other employees at the end of last school year. The Winston School serves a little more than 100 students in grades 6 to 12 and doesn’t have an endowment. Pandemic-related expenses the school has incurred include personal protective equipment and distance learning tools.
“It did allow us to continue operations uninterrupted where other schools couldn’t,” Harris added. “I think that was the biggest warfront.”
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