125 Sonoma Valley businesses received loans of $150k-plus

When the U.S. Treasury handed out hundreds of millions of dollars of pandemic stimulus loans to small businesses across the country earlier this spring, Sonoma Valley companies got their fair share of the windfall. In the Sonoma zip code of 95476, 125 local businesses received loans of $150,000 or more, and one fast food chain owner was in the top 1 percent nationwide of loan recipients, receiving more than $5 million.

The U.S. government’s Paycheck Protection Program is a key part of its economic stimulus plan. As of mid-June, almost 5 million loans amounting to more than $659 billion had been granted through the program, according to the website ProPublica. The program offers government-backed, low-interest loans that can be forgiven if employers maintain their payrolls and do not layoff any employees

The first round of PPP money of $349 billion was snapped up in a few days in April. The second round of $310 billion was available in May. A third round of $130 billion is currently open, with an application deadline of Aug. 8.

Most Sonoma Valley small businesses and nonprofits can participate in the program. Companies with 500 or fewer employees are be eligible, including small businesses, S corporations, C corporations, LLCs, private nonprofits, faith-based organizations, tribal groups and veteran groups. Also now eligible are self-employed workers, independent contractors, gig workers and sole proprietors.

The average loan approved through the program was $115,000 and the vast majority -- or 85.5 percent of all loans -- were for $150,000 and under, according to a Standard Poor’s industry report in last April.

Less than 1 percent of loans were for amounts larger than $2 million, the report states. Businesses are allowed to apply for the lesser of $10 million or 2.5 times their average monthly payroll.

Who got what

On July 6, ProPublica unveiled a project showing PPP loan approval amounts to date, by zip code. The data includes loan applications approved by banks and submitted to the Small Business Association. The data included is the company name, location, number of employees affected and loan amount.

California received most loans than any other state by a wide margin (581,125 vs. Florida’s 393,016).

In the Sonoma zip code of 95476, 125 businesses received loans of $150,000 or greater.

Of those, one received a loan of more than $5 million: Royal City Bell (over 1500 employees). Royal City Bell is a 63-location Taco Bell restaurant group in Kansas City who franchisee of record is SG Ellison who lives and works in Sonoma.

Two companies received $2 to $5 million: Cline Cellars (369 employees) and Mary’s Pizza Shack (500 employees).

Ten companies received $1 to $2 million: L’Auberge of Sonoma (MacArthur Place), Artisan Bakers (bread company on Eighth Street East); the Girl & the Fig; Don & Sons wine company; Hanna Boys Center; Laura Chenel Chevre cheese company; Sangiacomo Vineyards; Bolt Staffing; Vode Lighting; and Free Flow Wines.

The number of Sonoma Valley companies that received loans of less than $150,000 – the vast majority of businesses in the program -- has not been made available.

Do they need to pay it back?

Companies and nonprofit organizations that receive PPP loans may have the loans forgiven if they meet certain criteria, including not laying off employees during the period covered by the loan. Applicants must attest in their application that the loans are necessary for their continuing operation.

The restrictions surrounding how the money must be spent — for example, that 75 percent of the loan must be spent on payroll in order to be forgiven in a specific period of time — have concerned some business owners.

The Girl and the Fig restaurant group received $1 to $2 million and owner Sondra Bernstein describes it as a “lifeline” but said that she has spent some sleepless nights worrying about the intricacies of the program’s forgiveness rules.

“We have to be strategic because the loan is most useful if it gets us through not just these initial months but the rough road that most likely lies ahead,” she said.

A fast-growing corporate lighting design business based in Sonoma, Vode Lighting, received more than $1 million. Chief Revenue Officer George Mieling said that the loan gave his team “peace of mind” to continue operations.

“Not only did we maintain our employee base throughout, we also started hiring new personnel for positions we had budgeted for 2020,” he said.

John Merritt and Elaine Bell will be celebrating the 40th anniversary of their mega-catering business next year.

Merritt said that their $500,000 to $1 million loan has been most helpful in keeping their employees employed but the couple has concerns about the repayment. “The program was put together very quickly, which was great, but the rules keep changing and not all the details had been worked out, and still haven’t.”

“We could have survived this but we wouldn’t have been able to keep our staff employed. We still have no cash coming in so our concern is about the future. In theory, this money does not carry forward and we have a very uncertain fall and long winter [of little to no business] stretching ahead of us.”

Bell and Merritt are frustrated by inconsistencies in state and county rules.

“For example, a group may gather with social distancing for an outdoor wedding ceremony, but no food and drink may be present,” said Merritt. “That same group could reconvene at a restaurant with outdoor seating, with social distancing. That’s not scientific and is hurting our business.”

Hanna Boys Center received a loan in the $1 to 2 million range.

Interim co-CEO Tom Coughlan said that loan enabled the nonprofit boys facility to keep all of its staff employed —including the residential staff even when most students returned home. He said that during this time, residential staff were completing online professional development modules, clinicians hosted tele-therapy sessions, and teachers continued to deliver lessons online.

“The loan provided us with adequate staffing to be ready when our students returned for their summer program,” said Coughlan.

Vince Albano, CEO of Mary’s Pizza, said that their PPP loan enabled his 17-location company to stay open during what he describes as “the most challenging time in our industry's history.”

Mary’s Pizza elected to use 100 percent of the loan for wages only, something made possible by the recent extension – from eight to 24 weeks – of the deadline for companies to have spent their loans.

“The [extension of the] loan also enabled us to temporarily increase pay, ‘Hero Pay,’ to our crew members for six weeks,” he said.

“There’s no doubt in my mind that this loan has enabled us to keep our doors open, continue employing our crew members, pay our bills, and to provide my grandmother Mary’s recipes to the community with an extended timeline until we return to profitability,” said Albano. “It’s a blessing!”

Note: The Sonoma Index-Tribune’s parent company, Sonoma Media Investments, received a PPP loan of $3.4 million. SMI also owns the Santa Rosa Press Democrat, the Petaluma Argus Courier, North Bay Business Journal, Sonoma Magazine and the Sonoma Gazette.

Contact Lorna at lorna.sheridan@sonomanews.com.