Feds poured millions into Chandler to save jobs - SanTan Sun News SanTan Sun News

Feds poured millions into Chandler to save jobs

July 19th, 2020 development
Feds poured millions into Chandler to save jobs

Staff Writers

The federal government pumped a staggering amount of money into 3,988 Chandler businesses, nonprofits, churches, private schools and other entities to hold on to more than 78,000 jobs as the economy began reeling during the first few months of the pandemic.

Records released by the U.S. Small Business Administration earlier this month show that the agency gave Chandler entities – some with addresses at private homes – at least $545.6 million and as much as $841.3 million in Paycheck Protection Program loans.

Most of those loans likely won’t have to be repaid, under SBA guidelines, though the agency states:

“Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.”

The loans to Chandler entities ranged from as little as $88,325 to as much as $5 million, the SBA data show.

The number of jobs the borrowers said they were saving didn’t necessarily reflect the size of the loan they received, with six recipients of seven-figure loans listing no jobs saved, according to the SBA data.

The SBA did not identify the 3,435 Chandler entities that each borrowed less than $150,000.

And while it did provide names and addresses for 553 entities that obtained loans of at least $150,000, the agency did not disclose the specific amount they got.

The incomplete data was released by the SBA after weeks of pressure from Congressional Democrats and government watchdogs about the lack of transparency in 4.9 million loans totaling $520.6 billion that it has approved so far nationwide. The agency also extended the deadline to  Aug. 8 for applying for some of the estimated $130 billion that remains unspent.

The PPP loan funds – described by the SBA as “a direct incentive for small businesses to keep their workers on the payroll” – are part of the $2 trillion pandemic relief package approved by Congress in March that also included other assistance to individuals, businesses and local and state governments.

PPP loans are aimed at preserving jobs by helping borrowers maintain their payroll and stay afloat by using some of the money for rent, mortgage interest or utilities.

The loans comprised the largest portion of the multi-aid effort, accounting for $670 billion, or 26 percent, of the total package.

Arizona’s share of the PPP money totaled between 6.5 billion and $12.5 billion.

If you’re wondering why the loan amounts aren’t more precise for large borrowers and why the identities of thousands of smaller ones remain a secret, it’s because the SBA wanted it that way.

For weeks, the SBA and the Treasury Department squabbled with Congress and others over the paucity of data it had been releasing about the way it was doling out taxpayers’ money as the economy buckled beneath the weight of business shutdowns.

Treasury and the SBA officials said they were protecting the borrowers’ privacy.

Lobbyists for organizations like the National Federation of Independent Business were reported to be concerned that businesses would be hurt competitively or subjected to “public shaming” if identities were disclosed.

While refusing to list much information beyond an itemization of the amount of each below $150,000 and the number of jobs supposedly being saved, the SBA included the names and addresses of those that borrowed $150,000 or more.

But it listed those recipients only within one of five categories of loan ranges: $150,000-350,000, $350,000-1 million, $1-2 million, $2-5 million and $5-10 million.

So, the identities of 3,435 Chandler recipients of loans totaling just over $343.5 million remain a secret. The total number of jobs saved by those recipients was 50,703, according to the data.

Treasury Secretary Steven Mnuchin said the way the loan data was released “strikes the appropriate balance of providing the American people with transparency, while protecting sensitive payroll and personal income information of small businesses, sole proprietors, and independent contractors.”

But in a June 25 report, other problems with the program were cited by the federal U.S. Government Accountability Office, the federal government’s primary auditing agency.

“SBA moved quickly to establish a new nationwide program, but the pace contributed to confusion and questions about the program and raised program integrity concerns,” the GAO said.

It said borrowers and lenders “raised a number of questions about the program and eligibility criteria” and noted that the agency issued multiple rules to address confusion among prospective borrowers.

Moreover, the GAO warned, “to help quickly disburse funds, SBA allowed lenders to rely on borrower certifications to determine borrowers’ eligibility, raising the potential for fraud.”

The data related to Chandler PPP recipients lists no recipients in the $5 million to $10 million range; 24 in the $2 million to $5 million range; 47 in the $1 million to $2 million category; 174 that received between $350,000 and $1 million; and 308 that got between $150,000 and $350,000.

Among those categories in Chandler, the 174 recipients of loans between $350,000-$1 million accounted for the most jobs saved at 9,831. The total amount borrowed by those entities ranged between $60.9 million and $174 million.

The 308 recipients in the $150,000-$350,000 range received a total of between $46.2 million and $107.8 million and saved 8,020 jobs, according to the SBA data.

In the $1 million to $2 million category, the 47 entities obtained a total $47 million to $94 million and saved 5,052 jobs, the data show.

The 24 recipients in the $2 million to $5 million category saved 4,628 jobs after obtaining loans totaling $48 million to $120 million.

For six recipients of seven-figure loans, the SBA data show either a 0 or a blank under the category for jobs saved. Two of those companies, Hawkeye Electric and DBSI, Inc., each received loans of between $2 million and $5 million.

No job information also was listed for four companies in the $1 million to $2 million category: Advanced Materials Technologies, Aerospec, JC OPS Co. and ITS.

The Chandler data also has a number of private and charter schools and companies that provide services to them among the recipients.

They include The American Virtual Academy, which operates Primavera Online High School, and Vertex Education, which provides services to charters. They each received loans of between $2 million and $5 million to save a combined 377 jobs.

Legacy Traditional School received four loans totaling $1.4 million to $4 million for four Valley campuses and reported saving 347 jobs.

Valley Christian School reported saving 45 jobs for the loan of $1 million to $2 million it received while the Autism Academy for Education and Development claimed 208 jobs saved for its loan in the same category.

Two other schools, Seton Catholic, saving 77 jobs, and Skyline Academy, claiming 50 jobs, were in the $350,000 to $1 million category while St. Dominic Savio received between $150,000 and $350,000 to save 47 jobs.

Loans of $350,000 to $1 million went to three churches: Cornerstone Christian Fellowship had no job information while Compass Christian Church reported 62 jobs and Tri-City Baptist Church said it saved 144 jobs.

Six other Chandler churches were all in the $150,000 to $300,000 category: Faith Family Church (34 jobs), St. Mary’s Catholic Church (75 jobs), St. Andrew the Apostle (19 jobs), Grove Bible (28 jobs), Antioch Community Church (50 jobs) and Crossroads Church of the Nazarene (34 jobs).

While many restaurants presumably received less than $150,000 and are therefore unidentified, 11 chains and independent restaurants and bars were among recipients of loans greater than that – including state Rep. Jeff Weninger’s Arizona Sandwich Shops, which was in the $350,000 to $1 million category.

Someburros and San Tan Brewery received the largest loans – $1 million to $2 million each – to save 348 and 105 jobs, respectively.

Receiving loans of $350,000 to $1 million were Top Line Restaurants, which saved 280 jobs at its Denny’s eateries, and Desert Subway, which saved 126 jobs.

Other restaurants are listed in the $150,000-$350,000 category, including the relatively new Hidden House restaurant downtown, which saved 40 jobs; Ginger Monkey, with 44 jobs; Majerles, with 33 jobs; the Brickyard with 20 jobs; and Helluva Brewery, with two jobs.

Besides the churches, two other nonprofits – AZCEND with 42 jobs and ICAN with 28 jobs – received loans of $150,000-$350,000 each.