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Federal loans to OC businesses may have saved more than 700,000 jobs

After the coronavirus pandemic wreaked disaster on businesses large and small, an emergency federal loan program was a lifeline for many, including more than 64,000 Orange County companies that received billions of dollars to help pay their expenses.

Most importantly, the Paycheck Protection Program may have saved nearly 740,000 jobs here in the short term, according to newly released federal data.

Businesses and nonprofits that received loans provided estimates on how many workers they expected to bring back or retain, and the government released the information in two batches – loans of $150,000 or more, and smaller loans – with varying levels of detail in each batch, so it’s too early to gauge how accurate it is.

But it’s certain that local businesses benefited, some of them greatly, from the program, which allows the loans to be forgiven if certain criteria are met.

Among the businesses that got larger loans (between $150,000 and $10 million, according to the data):

  • About 10,068 businesses received funding that helped pay an estimated 485,155 workers.
  • The most jobs were retained in accommodation and food services (including hotels and restaurants), followed by manufacturing and the professional, technical and scientific services sector; each retained at least 60,000 jobs.
  • The cities  where the most businesses got help were Irvine (1,691 loans); Anaheim (1,095 loans); Santa Ana (950 loans) and Orange (597 loans).

A Southern California News Group analysis of the data on smaller loans found roughly 54,000 Orange County businesses received loans totaling $1.9 billion, which helped retain about 254,000 jobs.

It’s impossible to combine the larger and smaller loan categories, because the same information wasn’t released for each of them. (Also, for some of the larger loans, the “jobs retained” column listed 0 or was apparently left blank.)

But some Orange County businesses can easily quantify what the federal aid meant to them.

“It has been very helpful for us. We were able to essentially bring back all of our employees once our loan got funded,” said Aaron Barkenhagen, whose Fullerton-based Bootleggers Brewery operates three tasting rooms and a craft beer production facility.



Not all of the credit for keeping his brewery afloat goes to the $250,000 federal loan, though. When the state shut down bars and limited restaurants to take-out service, Barkenhagen immediately shifted gears to begin delivering beer to customers along with toilet paper, sourdough bread starter, and whatever else people were willing to buy.

Bars with food service were allowed stay open, so “in 14 days, we leased a food truck, built the menu, tested it at our location with some friends and family and then launched it,” he said.

The loan did help him beef up his pared-down staff, but Barkenhagen said the program’s initial guidelines were hard to meet – the first tranche of loans was released in April, with orders to put most of it toward payroll and a spending deadline at the end of June. (The deadline was later extended.)

“It’s not like a light switch you can flip on and off when you’re hiring employees,” he said. Plus, one of his biggest expenses, the lease for his production facility, wasn’t covered by the loan criteria, and it was impossible to get anyone on the phone to explain the confusing rules, he said.

Barkenhagen’s frustrations were a common refrain among business owners, said Derek Dykman, vice president of small business and investment services for NuVision Federal Credit Union, which handled 122 loans for Southern California borrowers.

While some of NuVision’s customers said the loans gave them the security they needed, he said others applied for the federal aid but ended up turning it down because they feared they wouldn’t meet the loan forgiveness criteria. Some said rent and other expenses were a bigger worry for them than employees, many of whom could collect unemployment.

For others, such as the Irvine-based, nonprofit Pacific Symphony, it was important to keep employees’ paychecks coming because they might be hard pressed to find other work. The $2.1 million federal loan allowed the symphony to offer musicians nearly full pay through early June and partial pay after that, said symphony President John Forsyte.

That breathing room to finish out youth education programs for the school year and allowed musicians to get creative, collaborating on Zoom concerts and commissioning and performing new works for the symphony, which has been providing music to the community for free.

Forsyte said while the shut down of live performances has been a struggle, it has caused symphony officials to innovate and rethink how they can best reach audiences.

“Unleashing people’s creative potential is maybe a lesson for all of us, as we’ve been forced to retreat from the speed with which we go from thing to thing,” he said.

Dykman at the credit union and John Sotoodeh, president of community and business banking at Bank of California, both said businesses that can be nimble have done best at keeping their heads above water in this ongoing crisis.

While the loan program helped a lot of businesses, “the most important lesson that I think we learned is that it’s not going to be perfect,” Sotoodeh said. “Being able to adapt quickly where there are gaps is going to be really important in the environment that we are in today.”

Source: Orange County Register

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