Sliver of companies got half of pandemic aid

Nearly 19,000 companies in WNY received aid from the Paycheck Protection Program, but only 5 percent accounted for half the money lent. Recipients include many well-known firms.

A lot of businesses received forgivable loans from the federal government to help them through the pandemic. To be exact, 18,768 in the eight counties of Western New York.

The loans were worth $2.2 billion, altogether. But a fraction of the companies — some 5 percent — received about half that sum. 

Two businesses got the maximum $10 million loan allowed under the Paycheck Protection Program: Ferguson Electric and the Buffalo Medical Group.

New Era Cap, widely criticized by public officials earlier this year for taking PPP money then laying off 117 employees, received the third-largest loan, $8.4 million. Other big borrowers include familiar local brands: Perry’s Ice Cream, Dunn Tire and NOCO, among them. 

A pair of the region’s biggest law firms — Hodgson Russ and Phillips Lytle — rank as the 10th and 11th largest loan recipients. Between them, they obtained $13.2 million.

Out of all for-profit industries, full-service restaurants received the most money, $87.6 million. Behind them were doctors, $83.9 million. Next were car dealers, lawyers and construction contractors. 

Who got what: Search our database of WNY recipients

E.J. McMahon, a senior fellow at the Empire Center for Public Policy, called the industry rankings “predictable.” Professional specialities and services, like doctors and lawyers, are high-wage, high-volume businesses, he said.

“They tend to be fairly labor-intensive. They see a lot of people, they employ a lot of people and they pay well,” McMahon said.

Largest loan recipients by industry

Industry Loans Value
Full-service Restaurants 1,022 $87,600,664
Offices of Physicians (except Mental Health Specialists) 442 $83,902,969
New Car Dealers 119 $68,498,369
Offices of Lawyers 611 $67,432,907
Plumbing, Heating, and Air-Conditioning Contractors 285 $48,370,301
Limited-service Restaurants 346 $40,213,018
Nursing Care Facilities (Skilled Nursing Facilities) 48 $39,293,761
Electrical Contractors and Other Wiring Installation Contractors 165 $34,473,239
Offices of Dentists 343 $33,081,383
General Freight Trucking, Local 193 $31,823,507
Commercial and Institutional Building Construction 160 $28,207,074
All Other Specialty Trade Contractors 195 $27,107,745
Hotels (except Casino Hotels) and Motels 169 $25,429,734
Engineering Services 90 $24,399,185
Highway, Street, and Bridge Construction 44 $21,056,248
Home Health Care Services 50 $20,762,728
Site Preparation Contractors 97 $19,908,715
Insurance Agencies and Brokerages 344 $18,615,200
All Other Professional, Scientific, and Technical Services 150 $18,423,323
Machine Shops 98 $18,233,699
Offices of Certified Public Accountants 133 $17,917,566
Collection Agencies 91 $17,385,963
All Other Miscellaneous Store Retailers (except Tobacco Stores) 233 $14,642,805
Dairy Cattle and Milk Production 167 $14,538,530
Offices of Physicians, Mental Health Specialists 81 $13,787,820
Source: Small Business Administration.

Nationally, the Paycheck Protection Program disbursed loans worth $523 billion. Funds went primarily to companies and nonprofits with up to 500 employees. Sixty percent of the loan was earmarked to cover 2.5 months of payroll, but the rest could go to other operating expenses, including rent. The loans are forgivable, if spent according to the rules. 

Fred Floss, a professor and economist at Buffalo State College, said the program design, which relied on banks to process loan requests, favored larger companies. 

“If you were a bigger company — if you were a law firm or an accounting firm that was used to putting in proposals to banks — you were going to end up being at the front of the line,” he said.

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Larger companies, with presumably more resources to pursue loans, were among the biggest recipients. That’s to be expected, given that the cost of payroll was a major factor in determining loan size.

Three hundred forty-three companies borrowed $1 million or more, for a total of $707.2 million. Thus, 2 percent of the companies that received loans obtained 33 percent of the funding. They employed, on average, 181 people each, compared with an average of 14 people each for smaller businesses that obtained loans.

“In the final analysis we are going to find there are great inequities and some businesses had great advantages over others,” U.S. Rep. Brian Higgins told Investigative Post. “That was the imperfect nature of it.” 

How bigger companies used their loans

Investigative Post contacted the two largest loan recipients, Ferguson Electric and the Buffalo Medical Group. Jim Schneider, president of Ferguson Electric, hung up on a reporter before he could pose any questions. 

Christi Berardi, a spokesperson for the Buffalo Medical Group, said loan money made up for revenue lost due to a reduction in surgeries performed during the pandemic shutdown. Officers took pay cuts while many employees were furloughed.

Jim Heaney & Susan Arbetter discuss the story on Spectrum News

“The PPP loan funds have allowed us to phase the employees back into the group and maintained their benefits while they were furloughed,” she said.

The Akron-based Perry’s Ice Cream, with a staff of about 410, borrowed $5.2 million. Spokeswoman Marissa Wilson said all of it went to personnel costs.

Largest corporate loan recipients

Company Loan Value City
Buffalo Medical Group, PC $10,000,000 Buffalo
Ferguson Electric Construction Co., Inc. $10,000,000 Buffalo
New Era Cap Co., Inc. $8,386,131 Buffalo
Steuben Foods, Inc. $8,133,700 Elma
Stark Holdings America, Inc. $7,788,300 Tonawanda
Whiting Door Manufacturing Corp. $7,309,000 Akron
Venture Forthe, Inc. $7,142,500 Niagara Falls
O-AT-KA Milk Products Cooperative, Inc. $6,728,700 Batavia
Mueller Services, Inc. $6,703,446 Tonawanda
Hodgson Russ, LLP $6,451,700 Buffalo
Phillips Lytle, LLP $5,985,404 Buffalo
Freed Maxick CPAS, PC $5,424,742 Buffalo
Skyworks, LLC $5,387,930 Buffalo
Dent Neurologic Group, LLP $5,191,637 Amherst
Perry’s Ice Cream Company, Inc. $5,154,000 Akron
West Herr Ford, Inc. $5,078,300 Hamburg
Rosina Food Products, Inc. $4,829,770 Buffalo
Mollenberg-Betz, Inc. $4,617,500 Buffalo
Wellsville Carpet Town, Inc. $4,537,540 Westons Mills
Capital Management Services, LP $4,531,100 Buffalo
Derico of East Amherst Corp. $4,513,800 Williamsville
Jamestown Container Co. $4,400,000 Falconer
Imagine Staffing Technology, Inc. $4,364,065 Buffalo
10 Ellicott Square Court Corp. $4,285,902 Buffalo
University Emergency Medical Services, Inc. $4,231,995 Buffalo
Source: Small Business Administration.

The eight car dealerships included in the records with the “West Herr” name obtained loans ranging from $597,472 to $5.1 million. They total $14.6 million. 

West Herr wasn’t the only brand that had multiple loans associated with its name. There were other auto dealers, like the Basil family, technology firms like Calspan, and developers like Uniland, among others.

Richard Braden, a West Herr attorney, said the company furloughed 1,150 of its 2,100 employees in March due to sharp declines in vehicle sales. The PPP loans were used “exclusively” for payroll, he said, adding that employees were brought back in May. 

“West Herr is a privately owned company that does not provide information regarding its finances or local owners,” he said. “Nevertheless, we can tell you that several West Herr dealerships properly applied.”

 Restaurants among smaller borrowers

PPP loans were especially important to truly small businesses, said Sue McCartney, director of the Small Business Development Center located at Buffalo State College. 

McCartney said the center’s clients, about 1,000 annually, typically employ 50 or less. The busy season typically settles down in the first quarter, McCartney said. Not this year —  even by July, people continued to flood the office searching for aid. 

“They were desperate for these funds — desperate,” she said.

McCartney said restaurants, in particular, were in need of assistance.

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Ilio DiPaolo’s, the Blasdell restaurant and banquet operation, received $336,442. Owner Dennis DiPaolo said the loan gave him “immediate hope” earlier this year and was a “huge” assistance in meeting payroll for his 80 employees. But the anxiety lingers. 

“It is really, really a precarious situation,” he said. “You blink your eyes and things are changing.”

Smaller businesses shared many of the same needs and concerns of their larger counterparts. 

Jacqueline Stover-Stitts, owner of Golden Cup Coffee Roastery on Jefferson Avenue, sells bulk orders to large businesses and operates a cafe. The company needed to meet payroll and pay rent. The $9,400 loan wasn’t enough, she said, but nonetheless a big help.

“I wouldn’t be here without it, let me just say that,” she said.

La Verdad Cafe in Lovejoy borrowed $10,000. The loan stabilized finances as the operation switched primarily to takeout during the shutdown, owner Vivian Robinson said. Business has boomed since. She added two employees this year. 

“I’ve done 60 percent better during the pandemic,” she said.

Loans that raise questions

Businesses and nonprofits that laid off people after getting help through the program drew ire across the country. Locally, New Era took the brunt of the public outcry, but others took similar steps.

Investigative Post identified 20 companies in Western New York that received a PPP loan then laid off 1,433 employees. Their loans were collectively worth $40.2 million.

Among them: AllPro Parking, which operates 31 parking lots in the region. It received $2.2 million then laid off 92 employees. AllPro’s parent company, Ciminelli Real Estate, received a loan worth $1.8 million for other business activities. 

Loan recipients who laid off employees

Company City Loan Layoffs
New Era Cap Company, Inc. Buffalo $8,386,131 117
Venture Forthe, Inc. North Tonawanda $7,142,500 6
Capital Management Services, LP Buffalo $4,531,100 52
Western Regional Off Track Betting Corp. Batavia $3,151,700 300
Gross Polowy, LLC Williamsville $3,047,986 146
Innovative Concepts in Entertainment Clarence $2,546,490 79
Allpro Parking, LLC Buffalo $2,151,367 92
Aero Instruments & Avionics, Inc. North Tonawanda $1,845,700 41
Unicell Body Company, Inc. Buffalo $1,308,500 25
Fancher Chair Company, Inc. Falconer $916,657 86
Heinrich Chevrolet Corp. Lockport $896,400 72
Jamestown Metal Products, LLC Jamestown $835,600 80
Buffalo Niagara Convention Center Management Corp. Buffalo $649,352 35
Fairview USA, Inc. Wheatfield $575,600 13
Eye Care and Vision Associates Ophthalmology, LLP Buffalo $548,900 60
Waxing Centers of Buffalo, LLC Orchard Park $500,637 93
Sear 200 LLC, dba Sear Steakhouse Buffalo $441,100 73
Uniquest Hospitality, LLC Buffalo $407,400 22
Fancee Limousine Service, Inc. Falconer $354,460 41
Source: New York State Department of Labor. 

Several companies under investigation obtained loans.

The Western Regional Off Track Betting Corp., a publicly owned creation of the state Legislature, received a $3.2 million loan while subject to federal and state probes. OTB subsequently laid off about 300 employees.

Nearly 100 debt collection agencies received $17.4 million. Two of them — Check Security Associates and ROC Asset Solutions — were among those being sued by the state Attorney General for deceptive practices.

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