Tech companies, research institutes cash in on federal loan program

Research institutes, tech companies and hotels were among Midpeninsula’s biggest beneficiaries of the federal Paycheck Protection Program, with some recipients getting loans of more than $5 million, according to data released this week by the Small Business Administration and the Treasury Department.

While ostensibly targeting small businesses, the program also provided millions of dollars to large foundations, research firms and nonprofit groups focusing on health care and education, the data shows. The list does not include specific loan amounts but reveals the range in the loan amount.

Among the diverse recipients were Izzy’s Brooklyn Bagels, a Palo Alto eatery that has received a loan of between $150,000 and $350,000, and Adara Inc., a marketing company on East Meadow Circle that specializes in traveler data and that received a loan in the $2 million to $5 million range. The list also includes the car dealer Magnussen’s Imports (between $1 million and $2 million) in Palo Alto and Ellison Towing in Mountain View ($350,000 to $1 million).

The SETI Institute, a Mountain View-based organization dedicated to searching for extraterrestrial life, also received a loan. Bill Diamond, president and CEO of SETI Institute, said the amount was $2.4 million. Many of the institute’s scientists work in research labs in NASA Ames Research Center in Mountain View, which has been shut down since mid-March, he said in an email.

“For these scientists, the inability to access labs means the inability to do much of their research, which in turn impacts their income and the indirect costs that support Institute administrative and facilities expenses,” Diamond wrote. “As such, PPP funds have been used to maintain these researchers on full salary, where laboratory time has been replaced by proposal writing for new and continued research.”

Diamond also said that the loan funds allowed the Institute to continue to lease its headquarters in Mountain View.

Without the loan, he wrote, the Institute would have undertaken “significant layoffs of both research and administrative staff.

“In our case the PPP funds precisely fulfilled the purpose they were intended for,” he said, adding that the Institute expects to pay back as much as 20% of the loan that has not been used.

Other research groups also benefited from the business program. Institute of the Future, a nonprofit based in downtown Palo Alto, received between $1 million and $2 million, while Palo Alto Veterans Institute for Research got a loan between $2 million and $5 million. The Fogarty Institute, a medical research hub located at El Camino Hospital, received between $150,000 and $350,000.

Local developers were also on the receiving end of the aid program. Spieker Companies, a property manager that focuses on multifamily housing, received between $1 million and $2 million. Sand Hill Property Company, a major commercial and residential developer with various properties in Stanford Research Park, received a loan of between $350,000 and $1 million, as did Hohbach-Lewin, an engineering design firm based on Sheridan Avenue.

In at least one local case, the federal data was incorrect. It stated that the Silicon Valley Community Foundation received a loan of between $2 million and $5 million, but in a statement, the foundation said that its loan was $259,756 and was for the nonprofit Raising A Reader. The foundation offers administrative support to Raising A Reader, which provides literacy and parental engagement programs. The foundation applied for a loan on Raising A Reader’s behalf.

In explaining the discrepancy, the foundation stated that the bank determined that it was eligible for a loan of more than $2 million, based on the foundation’s budget.

Here’s a full list of Midpeninsula beneficiaries of PPP loans, which can also be viewed through this webpage. A downloadable spreadsheet of the information can be found here.

PPP loans – update

Michelle Togerson, president and CEO of Raising a Reader, said in the statement that without the $259,756 loan, the nonprofit would have had a “very difficult time making sure that children and families across the country continued to have access to books during this critical time of school closures.”

The local hotel industry, which was decimated by the economic shutdown, received a boost from the federal program. Pacific Hotel Development Venture, whose Palo Alto hotels include Sheraton Palo Alto, The Westin and The Clement Palo Alto, received between $2 million and $5 million. The parent companies of Dinah’s Garden Hotel and Crowne Plaza Palo Alto received between $1 million and $2 million each.

The biggest recipient in Mountain View was the California Skin Institute, which offers medical and cosmetic skin treatment at various locations throughout the state. It received a loan of between $5 million and $10 million, according to the SBA data. In Palo Alto, the largest loan went to Enjoy Technology, which specializes in mobile retail and which also received a loan of between $5 million and $10 million.

Numerous education and media companies in the Midpeninsula also benefited from the loan program. Khan Academy, a nonprofit that offers online courses and was already running on a budget deficit pre-COVID-19, received a loan of between $2 million and $5 million, while German International School of Silicon Valley got between $1 million and $2 million.

“(During the COVID crisis) our deficit got larger and the fundraising environment got that much more uncertain,” said Salman Khan, founder of Khan Academy. “The PPP funds helped narrow our deficit.” The loan was spent on “aggressively supporting teachers, students and schools,” he said, noting that the nonprofit was able to retain its 180 employees across the U.S.

The for-profit online education platform Study.com, headquartered in downtown Mountain View, also received a significant loan through the federal program between $2 million and $5 million. The company had previously been hammered by requests for help from schools and parents as schools migrated to remote learning during the spring, and donated 100,000 free licenses to its learning platform.

Menlo College, a private school in Atherton, also received a loan between $2 million and $5 million. The funds were used to maintain its personnel, according to a representative from the college.

“The pandemic is taking a significant toll on the finances of our school,” a Menlo College spokesperson said in an email. “The loan is therefore critical for us to continue educating our students. … We are grateful to have access to these funds.”

OZY Media, a Mountain View-based media and entertainment company, received a loan of between $2 million and $5 million. Embarcadero Media, the parent company of Palo Alto Online, Mountain View Voice and The Almanac, received a loan of between $350,000 and $1 million.

The program also assisted numerous local restaurants, big and small. The British Banker’s Club in Menlo Park received a loan of between $2 million and $5 million, while Asian Box, which has a location at the Town & Country Village in Palo Alto and on Castro Street in Mountain View, received between $1 million and $2 million.

In Mountain View, several downtown restaurants were able to score loans between $150,000 and $350,000, including Amarin Thai, Chez TJ, Doppio Zero, Sakoon and Vaso Azzurro. One of the downtown night clubs, Monte Carlo, also received a loan between $150,000 and $350,000.

Three companies sharing the same P.O. box in Palo Alto and headed by Conrad Freeman, who owns 16 McDonald’s franchises along the Midpeninsula, also benefited from the federal program: Con-Lee Restaurants, named after Conrad and his wife, Lee Ann Freeman, got a loan of between $2 million and $5 million; Freeman Management received $150,000 to $350,000; and Con & Con Inc. received $350,000 to $1 million.

Palo Alto restaurants Fuki Sushi, Sundance Steakhouse and Protégé all received between $350,000 to $1 million each, and Jin Sho, Café Pro Bono and Taro, each got between $150,000 to $350,000.

According to the Treasury Department, the data covers nearly 75% of the loan dollars approved under the $660-billion program that federal lawmakers approved in March in response to the fallout from the COVID-19 pandemic and the ensuing economic shutdown. It only provides names of companies that have received loans of greater than $150,000 according to the department’s news release.

The nationwide organization Small Business Majority released a statement Monday that serious questions remain about how well the federal relief has served the “smallest, most vulnerable businesses” during the coronavirus pandemic, and that some struggling businesses have received a pittance through the PPP. It noted that in California, more than 2,500 small businesses received less than $1,000, including some receiving as little as $1.

“Underfunding has been a pervasive problem for borrowers since PPP launched,” according to the group. “About one in every four small businesses in our network have reported receiving a lower loan than what they requested. Many business owners received no explanation for why they did not receive the full loan amount, while others were told to accept less than what they would qualify for to move things through the process quickly.”

While 265 businesses in Mountain View received loans of $150,000 or greater, the majority received much less. An anonymized list of loan recipients shows that 1,038 businesses in the city received under $150,000, and more than half received an amount less than $30,000. Roughly 160 businesses received less than $10,000.

The nationwide organization Small Business Majority released a statement Monday that serious questions remain about how well the federal relief has served the “smallest, most vulnerable businesses” during the coronavirus pandemic, and that some struggling businesses have received a pittance through the PPP. It noted that in California, more than 2,500 small businesses received less than $1,000, including some receiving as little as $1.

“Underfunding has been a pervasive problem for borrowers since PPP launched,” according to the group. “About one in every four small businesses in our network have reported receiving a lower loan than what they requested. Many business owners received no explanation for why they did not receive the full loan amount, while others were told to accept less than what they would qualify for to move things through the process quickly.”

The full list of Mountain View companies that received $150,000 or more in loans can be found here.

Find comprehensive coverage on the Midpeninsula’s response to the new coronavirus by Palo Alto Online, the Mountain View Voice and the Almanac here.