P3 loans gave small businesses in LA County a lifeline
Before the pandemic, whenever there was a major event in Los Angeles – the Oscars, the Grammys, or professional basketball games – the AAA Flag & Banner Manufacturing screens were probably there.
And when the city’s sports and entertainment activities experienced a Covid-induced disruption in March, so did the earnings of the Mid-City-based company.
“It was scary,” said general manager Craig Furst. “My dad started the business 49 years ago and built a tremendous legacy in our industry and in the city of Los Angeles, and it pains me to see how this virus can take over a business with 200 skilled workers and the to close. “
Furst’s survival plan included shifting production to pandemic-related signage and germ shields for local hospitals and businesses. His team also produced and installed “fan cutouts” for Oracle Park, home of the San Francisco Giants, and the Oakland Coliseum, home of the Oakland Athletics, in time for the Major League Baseball season opener on the. July 23.
Furst funded these operations in part through the Paycheck Protection Program, which has helped it retain about half of AAA Flag & Banner’s workforce, pay its suppliers, and stay up to date on rent and fees. other invoices.
“We are operating at about a third of our normal capacity,” he said. “I thank PPP for allowing us this extra support to move us forward until this thing is over.”
AAA Flag & Banner is one of nearly 25,000 Los Angeles County-based small businesses that have received P3 loans over $ 150,000 as a direct incentive to keep their employees on the payroll.
The federal program, administered by the Small Business Administration, is on track to preserve 1.2 million local jobs, or about a quarter of the county’s 4.5 million workers, according to data released by the agency on July 6. .
“The SBA will cancel loans if all employee retention criteria are met and funds are used for qualifying expenses,” said Tyler Laferriere, associate economist at the Institute for Applied Economics at the Los Angeles County Economic Development Corp ., a nonprofit organization that, among other things, helps companies with less than 10 employees navigate the PPP application process.
“I think for thousands of businesses in Los Angeles, and well over a million workers in Los Angeles, that makes the difference between surviving and not surviving,” he added. “Without it, we would have been in a much worse situation than we are currently experiencing. “
LA County PPP Loans By Business Type
Most of the local businesses that have obtained PPP loans – over 10,000 – are in the manufacturing, health care, professional services or hospitality industries. These companies also accounted for nearly half of the potential jobs retained in the county, which Laferrière says is not surprising given that these are important industries in the county.
|Type of company||Number of businesses (payments of $ 150,000 or more)||Number of jobs retained|
|Employee share ownership plan (ESOP)||20||1,721|
|Limited Liability Company (LLC)||4,152||223,703|
|Limited Liability Company (LLP)||456||18 819|
|Non-profit child care center||19||700|
|Non-profit organisation||1,204||90 087|
|Subchapter S Corporation||4,196||202,506|
The data shows that most of the companies – 5,701 – are based in the city of Los Angeles, followed by 751 in Long Beach, 683 in Santa Monica, and 675 in Pasadena.
The SBA dataset for loans over $ 150,000 contained the names of the companies but not the specific amount given to each company. Instead, the loans have been divided into five categories. Some 178 companies received $ 5 million to $ 10 million on the high end while 14,201 received loans at the other end of the spectrum, ranging from $ 150,000 to $ 350,000.
The loan amount report was recently scrutinized in the media, with many small businesses claiming the loan they received differed from data released on July 6 by the SBA.
A similar question was raised regarding the number of jobs saved. For example, the SBA shows that AAA Flag & Banner kept 195 workers, but Furst said he was able to keep around 100.
“A blunt instrument”
Laferrière attributed the discrepancies to clerical errors, adding that the program was “meant to be a blunt instrument, an attempt by the federal government to inject as much money as possible into the economy that businesses could access to stay. afloat.
“And so of course it was going to be flawed,” he added. “There was going to be gaps, there was going to be challenges, but we can also see, particularly based on the industries that received help, some success in this program. … Almost a quarter of LA County’s workforce would have been held back because of these loans, and that does not include loans under $ 150,000.
Furst declined to provide details on AAA Flag & Banner’s PPP loan, but expressed concern over Covid closures.
“We were about to really put in a big marketing and sales effort, but, during the best prepared plans of mice and men, the government shut us down again,” he said. “We are survivors, and we will continue to do whatever it takes to survive, but as we continue to be challenged by the closures, it certainly makes it a lot harder and a lot, a lot scarier to predict the future.” . “
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