Close to $1 billion flowed directly to businesses in Kern County this year as part of the Paycheck Protection Program meant to keep small businesses afloat amid the economic fallout of the pandemic, according to federal data released earlier this month.
The massive federal aid program provided more than $500 billion in forgivable loans to commercial enterprises across the nation for losses incurred by the pandemic, with a majority of funds required to be used to keep paying employees.
In total, $900 million was given out to companies in Kern by the Small Business Administration in the form of 7,133 loans, according to an analysis of the data by The Californian. The analysis looked at data in all 50 ZIP codes in Kern County and covered loans ranging in size from $200 to $10 million.
The top 25 percent of total loans, or $225 million, went to about 80 local companies and ranged from $1.6 million to $10 million, with an average loan amount of $2.8 million, whereas the bottom 25 percent of total loan money went to 3,254 recipients, ranging in amounts from $200 to $190,000, with an average loan amount of about $70,000.
"I can’t say enough good things about the program," said Kelly Bearden, director of Cal State Bakersfield's Small Business Development Center, who since March has held webinars and assisted local businesses in applying for the funds. "Getting that kind of money out in that short of time saved a lot of hurt."
Bearden noted the National Federation of Independent Business, the largest small-business association in the nation, found in a survey that 80 percent of its members had received PPP funding. Bearden estimates numbers are similar in Kern.
Under the rules for the Paycheck Protection Program, employers had to use at least 60 percent of the money toward payroll and the rest could go toward rent, mortgage or other overhead expenses. Generally, any loans under $2 million will be forgiven on good faith, according to the most recent rules for the program.
WHO RECEIVED MONEY
The biggest loan given in Kern — for $10 million, the maximum loan amount — went to Diversified Utility Services, an electric utility construction contractor. The Unicorn Road business in north Bakersfield did not report how many employees it has.
H.F. Cox Inc., a petroleum transporter with a reported 324 employees, was the second-highest loan recipient, receiving about $8 million. Golden Empire Mortgage, which received $6.4 million, and Heart Hospital of Bakersfield (the name as listed in the data), which received $5.5 million, were also among the top recipients.
Overall, companies in the medical and health care, agriculture, and oil and gas industries received the bulk of the funds, The Californian's analysis found.
Agriculture, farming and farm labor companies received a combined $110 million and companies involved in oil and gas extraction, refining, and related services received $56 million. However, no major oil companies — such as Chevron, Aera and California Resources Corp. — showed up in the Kern or statewide data.
About $72 million was doled out to medical and health care companies, ranging from small local hospitals to doctor's offices, laboratories, optometrists, chiropractors and home health services. The largest recipients were Hall Ambulance; Heart Hospital of Bakersfield; Kern Valley Healthcare District, which operates a hospital near Lake Isabella; Good Samaritan Hospital in Oildale; and Dr. Ravi Patel, an oncologist who owns the Comprehensive Blood and Cancer Center. Terrio Physical Therapy, Hoffmann Hospice and a company that owns Accelerated Urgent Care were also among the top medical recipients, receiving loans between between $1.5 million to $2 million each.
Also among the top health care recipients, receiving $1.6 million, was Kingston Healthcare Center, a 180-bed Bakersfield nursing home with a COVID-19 outbreak so dire that the state had to send in a strike team to assist with care; 100 residents fell ill with COVID-19 and 19 died.
Neither Dignity Health nor Adventist Health, which combined operate six hospitals in Kern, showed up in the data, but both companies are headquartered outside of Kern.
Dentist offices collectively received about $14 million, while oil and gas and associated industries received about $40 million.
Among restaurants and food establishments, 432 loans were made for a combined $40 million, with a median loan amount of about $44,000. The largest of those loans went to groups that operate fast-food chains. For example, $1.9 million went to Wendy's of the Pacific, which operates a number of Wendy's fast-food restaurants. Among full-service restaurants, La Costa Mariscos, The BLVD and Lengthwise Brewing received between $500,000 and $900,000 in loans.
Beauty salons received $1.3 million, nails salons $600,000 and barber shops $87,000, according to the data.
Eleven private or charter schools also obtained PPP funding, with the top loan in that group of $4 million going to Blue Ridge Academy in the tiny city of Maricopa, which describes itself on its website as a tuition-free, public charter school for K-12 students in Los Angeles, Ventura and Kern counties. Bakersfield Christian High School received a $700,000 loan, the second-highest loan to a private school.
Landscaping companies received $31 million, the data showed.
SOME BUSINESSES EXCLUDED
Not all businesses were eligible for the funding. In particular, "sin" industries like strip clubs and gambling were barred from receiving the loans along with companies that engage primarily in lobbying and political work. Several strip clubs in Michigan, along with the American Association of Political Consultants, filed lawsuits challenging their inability to access the funds. However, none of the legal challenges prevailed.
Still, Western Pacific Research, a local Republican political consulting firm whose clients include Reps. Kevin McCarthy and Devin Nunes, received a PPP loan of $30,000. So did Yankee Communications, a local company whose website says it helps its "clients impact the decisions of elected representatives and government officials at all levels."
Asked about the loan, Cathy Abernathy, president of Western Pacific Research, said her company does nonpolitical work, as well, and the money was used to compensate for issues encountered in that work.
"Western Pacific Research has been a client’s professional testing site for seven years for people to take required tests to either start or continue their employment," Abernathy said in an email response. "During the spring and summer we had to extend our hours per day and per week to accommodate testers, remaining open 7 days/week, 10-12 hours per day for our client." Abernathy said testing was for essential workers, including paramedics, X-ray technicians, respiratory therapists and schoolteachers.
Jimmy Yee, owner of Yankee Communications, which received a $50,000 loan and listed four employees in its PPP application, said he hasn't done political campaign work in 15 years and is now primarily involved in business-to-business consulting. He said his clients include Grimmway Farms, Hard Rock Cafe, which is pursuing a casino development south of Bakersfield, and Dignity Health.
"Like other businesses, we were impacted. Some clients pulled back," he said, adding the money was used to cover payroll for the firm's four employees.
In addition to the federal Paycheck Protection Program, Kern County and Bakersfield used federal stimulus money they received to do their own loan programs for small businesses. Kern Recovers, the county-administered program, provided $25 million in assistance, while the city allocated $5 million for grants through its B-CARES program.
MORE PPP IN THE WORKS
McCarthy and House Republicans on Thursday held a news conference calling for immediate action to extend the Paycheck Protection Program.
“More than 87,000 California businesses received a PPP loan to help keep their businesses afloat and their employees paid during the most economically crushing crisis in modern history," McCarthy said in an emailed statement on Friday. "That was months ago. As it stands, there is currently $138 billion available for PPP — Congress just needs to release it, and should do so immediately to ensure America’s families get the support they deserve this holiday season."
Bearden, of the Cal State Bakersfield Small Business Development Center, said he expects Congress to finalize the next round of PPP by the end of January. He anticipates it will be different from the first round in that loans will be targeted to particular industries and companies will have to demonstrate significant income loss.