Loan Plan for Businesses Benefits Law Firms, Other Large Entities
By Kevin Dietrich
The Paycheck Protection Program, designed to help small businesses survive the slowdown connected to Covid-19, sent money to many large and well-known entities in South Carolina, including law firms, restaurant chains and private schools.
South Carolina companies, corporations and nonprofits received tens of thousands of PPP loans, including 7,615 loans of at least $150,000, according to information released by the Trump administration.
In South Carolina, there were 33 PPP loans of between $5 million and $10 million, 202 loans of between $2 million and $5 million, and 761 loans of between $1 million and $2 million.
Included in the group that received loans of up to $10 million were eminent companies from around the state, including ACM Fatz VII, the Taylors-based parent of restaurant chain Fatz Cafe; Calhoun Management Corp. of Clemson, which operates a number of Wendy's restaurants; textiles firm Inman Mills, of Inman; Columbia-based M.B. Khan Construction Co. Inc.; Mount Pleasant law firm Motley Rice LLC; Columbia law firm Nexsen Pruet LLC; and Greenville-based child day care company The Sunshine House Inc.
Some of the above employ more than 500 individuals, with two – The Sunshine House and ACM Fatz VII – having more than 2,000 workers, according to business data firm Dun & Bradstreet Corp. When the Paycheck Protection Program was created by Congress in late March, it was designed to offer forgivable loans mainly to small businesses, or those with 500 or fewer employees.
However, Small Business Administration guidelines allow companies with more than 500 employees to be eligible for PPP loans in certain industries, such as those in fiber optic cable manufacturing, automobile manufacturing and broadwoven fabric production. In addition, eligibility in some industries is based on revenues.
Some South Carolina companies with more than 500 employees that received PPP money stated in their applications that the loans would go to support as many as 500 jobs, rather than listing their total number of employees.
ACM Fatz VII, Calhoun Management and the Sunshine House, for example, were among several South Carolina companies that stated that PPP money would go to support 500 of their workers, according to a database published by the Washington Post. This is despite the fact that all three companies are listed by Dun & Bradstreet as having well in excess of 500 workers.
Attempts to reach ACM Fatz, Calhoun Management and The Sunshine House for comment were unsuccessful.
In all, there were more than two dozen South Carolina companies that said the Paycheck Protection Program money they received would support 500 employees. In addition, some companies didn't list how many employees would be supported by PPP money, while others reported zero as the number of jobs they would retain with the money.
Economic uncertainty across the country and within Nexsen Pruet led the law firm to apply for a PPP loan to avoid Covid-19-related layoffs, according to Leighton Lord, board chair for Nexsen Pruet. The firm used its PPP money to support 348 jobs, according to a database compiled by the Washington Post.
The firm enacted significant attorney and senior management pay cuts along with expense reductions in response to the pandemic at its eight offices, which includes locations in Charleston, Columbia, Greenville, Hilton Head and Myrtle Beach, Lord said in a written statement.
"The PPP money will not cover our law firm's reduction in revenue due to the economic downtown and its impact on the companies we serve, but the money is helping us bring back furloughed employees faster," Lord added. "This money is also allowing us to continue to serve our clients who are having to defer payments, or request reductions in legal fees, while they continue to restart operations."
M.B. Khan, which currently has 413 employees, applied for a PPP loan because of uncertainty connected to the pandemic, company President Bob Chisholm said in a written statement.
"The construction industry is different from retail and many other businesses," Chisholm wrote. "For instance, some projects have been delayed or canceled, new construction opportunities are shrinking, and as our current jobs (are completed), we would have had employees without work.
"We applied for this loan to not only retain our employees now, but to ensure that we have the ability to continue paying employees during an extended recession," he added.
Among entities receiving between $2 million and $5 million were Myrtle Beach construction firm Burroughs and Chapin; Greenville law firm Gallivan, White & Boyd P.A.; Charleston law firm George Sink P.A. Injury Lawyers; Columbia law firm Haynsworth Sinkler Boyd P.A.; Southeast Restaurants Corp., which operates Pizza Hut restaurants throughout the state; The National Wild Turkey Federation Inc., based in Edgefield; and Columbia law firm Turner Padget Graham & Laney P.A.
There were also a number of universities and colleges that received money: Benedict College, Claflin University, Coker University, Columbia College, Columbia International University, Converse College, Limestone College, Presbyterian College and Southern Wesleyan University all received as much as $2 million.
Among the private schools that received money in South Carolina were the Ashley Hall Foundation, connected to Charleston girls school Ashley Hall; Bishop England High School and Porter Gaud School, also in Charleston; Christ Church Episcopal School of Greenville; Hammond School and Heathwood Hall Episcopal School, both of Columbia; Southside Christian School in Simpsonville and Spartanburg Day School in Spartanburg. Ashley Hall, Christ Church Episcopal and Porter Gaud received as much as $5 million while the other schools received as much as $2 million.
In all, dozens of churches and private secondary schools received loans of more than $150,000.
The Paycheck Protection Program is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which set aside a total of $659 billion for the program and began in early April. The program has been extended through Aug. 8.
Nationwide, there were more than 4 million PPP participants. About 660,000 loan recipients received $150,000 or more. Loan forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels, according to the Small Business Administration.
PPP loans were not made by the SBA, but by lending institutions and then guaranteed by the SBA. Borrowers applied to lenders and self-certified that they were eligible for PPP loans.
The self-certification included a good faith assertion that the borrower had economic need requiring the loan and a certification that the borrower had applied the affiliation rules and is a small business.
The lender then reviewed the borrower's application, and if all the paperwork was in order, approved the loan and submitted it to the SBA.
All PPP loans are subject to Small Business Administration review and all loans over $2 million will automatically be reviewed, according to the SBA.
Among lenders, South State Bank made the most PPP loans of $150,000 or more in South Carolina, with 959. First Citizens Bank was next at 737, followed by Truist, the name of the company formed by the recent merger of BB&T and SunTrust, at 680.
More than 80 percent of the PPP loans processed by South State Bank were for less than $150,000, according to Cutter Davis, director of commercial banking for South State.
"South State provided PPP loans to borrowers who met the eligibility criteria established by the SBA," Cutter said in a written statement. "We focused first on serving the needs of our customers, but also endeavored to assist the needs of the greater community by also assisting non-customers during the PPP loan application process."
Among South Carolina locations, Greenville received the most PPP loans of $150,000 or more, with 776, while Columbia received 631 and Charleston received 623.
Names of entities that received loans of less than $150,000 have not been disclosed.