More than 500 local businesses and entities received loans ranging from a few hundred dollars to more than $1 million through the Paycheck Protection Program, a federal relief effort that handed out cash intended to help businesses keep paying employees as the COVID-19 pandemic dealt a blow to the nation’s economy.
Many of the Santa Cruz County recipients were businesses in the county’s most prominent industries: produce wholesaling and cross-border logistics. But the list of local recipients also includes restaurants, schools and religious organizations.
The two largest loans in the local area went to Mariposa Community Health Center (MCHC), which received $2-$5 million dollars, and Tubac Management Company (which operates the Tubac Golf Resort), with a loan between $1 million and $2 million.
Ed Sicurello, CEO of MCHC, said the loan “had a pretty significant impact.” He said the health center had decided to avoid furloughs or layoffs as long as possible, but the loan still “helped ensure the stability of the organization.”
Sicurello said that nearly all of the health center’s dental revenue was wiped out, as well as about 50 percent of medical revenue, when restrictions were imposed on health services.
“Our dental staff was redeployed to staff our screening stations, we implemented pharmacy curbside service and pharmacy delivery service for our high risk patients, so staff was redeployed to perform all of those kinds of functions,” he said.
“There was never a time where there wasn’t work to do, but all of those services are things that we don’t receive revenue for,” he added.
Data on the loans was released by the U.S. Treasury Department and Small Business Administration on July 6. The data didn’t list the county of each recipient, but did include city information. The Nogales area counted the largest number of loan recipients in the county at 228, with another 93 in Rio Rico. There were also loan recipients in Tubac, Patagonia, Sonoita, Amado, Elgin and Tumacacori.
At least 69 companies based in Santa Cruz County received loans of $150,000 or more and their names were included in the data made public on Monday.
They included familiar names like Chamberlain Distributing and Manuel Huerta Trucking; Nogales auto dealers Cropper’s and Horne Ford; local restaurants like Wisdom’s Cafe in Tumacacori; contractors like the Rio Rico-based GRG Construction; professional services firms including Joeng Lizardi P.C.; real estate firms like North Face Investments; nonprofits including the Santa Cruz Training Center; and at least one hospice, the Soulistic Medical Institute in Tubac.
And while the loans helped employers like MCHC avoid layoffs, in the hard-hit hospitality industry, the funds might have been a critical factor in bringing staff back to work.
Some employees at the Copper Brothel Brewery were furloughed earlier this year, but they all went back to work when the Sonoita eatery reopened with limited capacity in mid-May, said Monika Jesser, a manager at the restaurant. The business received a $150,000-$350,000 loan in early April.
Jesser said the business had navigated a decrease in sales over recent months, as well as increased costs for basic staples including burger patties and newly-necessary items like sanitation supplies. “It’s definitely thrown a lot of wrenches into the mix,” she said.
For now, Jesser said, the restaurant’s more than 30 employees are back to their regular work schedules and the restaurant is cautiously moving forward. “It feels really good,” she said, but added: “We’re not out of the red just yet.”
For loans under $150,000 – including 439 listed in the county – the government did not release the names or street addresses of recipients. Tens of millions of dollars were issued to local businesses under the program, but the exact amount isn’t clear because the data only included dollar amount ranges for loans of $150,000 or more.
The loans provided under the PPP can be “forgiven” – meaning borrowers don’t have to pay them back – if most of the money goes to payroll costs for employees earning a salary under $100,000, according to information released by the U.S. Treasury and Small Business Administration. Some of the cash can also be used for overhead costs.
The loans won’t be fully forgiven for businesses that lay off employees.
The program disbursed hundreds of billions of dollars to businesses around the country beginning in April and was meant to slow job losses during the crisis. In a news release, the treasury said that 4.9 million loans were distributed and the average loan was approximately $100,000. Across the state, 11,326 Arizona businesses received loans of $150,000 or more and another 69,685 received loans below that threshold, according to the data.
Wick Communications, the parent company of the Nogales International that operates more than two dozen local newspapers around the country, received a $4 million loan. That loan was listed in Sierra Vista, Ariz., where the company is based. Other corporations doing business in Santa Cruz County but headquartered elsewhere would also be listed according to their home address, making it difficult to know how much – if any – of their loan money was used to support local operations.
“The PPP is providing much-needed relief to millions of American small businesses, supporting more than 51 million jobs and over 80 percent of all small business employees,” the U.S. Treasury said in a July 6 news release announcing the publication of the data.
In Santa Cruz County, unemployment rose from 10.5 percent in March to 15.9 percent in April, but then fell to 10.8 percent in May. But the direct impact of the PPP loans on those figures isn’t entirely clear.
Several local business owners that spoke to the NI said they wouldn’t have resorted to layoffs even if they didn’t receive the loans, but they weren’t complaining about the extra cash.
“It was absolutely fantastic for us. We never thought of laying off any of our employees, but it was a tremendous help,” said Jaime Chamberlain, president of Chamberlain Distributing and chairman of the Greater Nogales-Santa Cruz County Port Authority, whose business received a loan between $350,000 and $1 million. “In the midst of uncertainty, when you know that you can pay your health insurance and you know that you can pay your employees, that is a really big relief.”
“We were not thinking of laying off anybody anyway, we were going to try to ride it (out),” said Miguel Suarez, president of MAS Melons & Grapes, a local produce importer that received between $350,000 and $1 million through the program.
“But with the loan, it helped a lot,” he added.
Suarez said the company was using the money to pay employees whose salaries are below a threshold specified by the program. The impact of the pandemic, he said, was mixed, with demand from foodservice providers declining while demand from retailers grew.
“In between the two – one slowing down and the other picking up, I think we’re pretty much about a normal situation,” he said.
More than 20 of the local businesses that received loans over $150,000 are produce wholesalers or food growers, according to industry classification codes included in the federal data. And at least 15 are involved in logistics operations like trucking, transportation and warehouse storage. Five were listed as nonprofit organizations.
“Getting the loan made our decision-making easier,” said Guillermo Valencia, co-owner of Valencia International, which received a loan between $150,000 and $350,000.
He said the customs brokerage’s business took a hit from the pandemic, with many clients slowing down and others shutting completely. He pointed in particular to Sonoran manufacturers, some of whom were forced to shut down temporarily, as well as produce importers who sell mainly to foodservice providers.
But the firm kept workers employed in recent months by paying with funds from the loan.
“When you have a downturn in business… you say, ‘OK, well do I have to make cuts because my business is going to slow down and I’m not going to have enough work for my employees? So keeping my employees on board was a (much) easier decision because of the paycheck protection program,” Valencia said.
Still, Valencia and Suarez both said there would still be seasonal layoffs at their businesses, which are typical in the slower summer months. Chamberlain said his company usually makes only a small number of layoffs in the summer and he was hoping to avoid any layoffs this season due to a new contract for mangoes.