Multiple Businesses Linked to Gavin Newsom Received Unusually Large Federal Pandemic Loans
Eight companies owned in part by California Gov. Gavin Newsom received almost $3 million in loans from the Paycheck Protection Program, according to a new report.
Although the report noted that Newsom placed his ownership interests in the business into a blind trust, he remains publicly listed as the group’s founder. His sister, Hilary Newsom, is listed as president.
The report said Villa Encinal Partners Limited Partnership, linked to the PlumpJack winery in Napa, received a loan for $918,720 on April 14. According to SBA data, 14 employees were retained through the funding.
“It’s unexpected for a 14-employee organization to get nearly $1 million,” said Sean Moulton, a senior policy analyst with Project on Government Oversight. “The purpose behind this program was to save entry-level jobs, people going in and working on that paycheck. That was what we put this out there for, to stop unemployment.”
Erin Burke, who owns the Millbrae Pancake House, said something seems off because under the terms of its PPP loan, her restaurant received $431,400 and retained 53 employees.
“That seems unfair because there are small family businesses like ours that need that money,” Burke said.
An official with the San Francisco Chamber of Commerce said most businesses felt they did not get enough through the PPP process.
“I think it’s heartbreaking,” said Jay Cheng, the chamber’s public policy director. “We see huge discrepancies between small business and the kind of loans they got and their ability to get loans and larger companies that are well-resourced and well-staffed and had strong relationships with their banks.”
Another company affiliated with the PlumpJack Group, Balboa Café Partners LP, received a $506,799 loan on April 29.
“A commercial data firm estimated in June 2020 that Balboa Café Partners employed seven individuals, but SBA data associated with their loan application states they retained 55 employees,” KGO reported.
The PlumpJack Management Group responded to the station’s inquiries with a statement.
“Like many other companies facing extreme financial duress during the pandemic, we used loan monies to protect our workers and keep them employed. Our staff members and their loved ones have depended on these programs for their livelihoods. Gavin Newsom is not affiliated with the operation of the companies in any way. Any suggestion otherwise is unequivocally false,” spokesperson Jeff Nead said.
KGO estimated that each of the 14 employees retained by Villa Encinal Partners would have had to be making about $160,000 a year based on the size of the loan. When it asked the company for payroll records, it received another statement from Nead.
“Plumpjack Management Group is operating within the federal guidelines created for COVID-19 SBA loan recipients. These funds have been critical in keeping our staff employed and continuing our operations. Any implication that we have done anything outside of the guidelines (or that we have filed for forgiveness on the loan) is irresponsible,” Nead said.
If the company does apply to have the loan forgiven, “they have to certify when they apply that they retained their employees,” said Miryam Barajas, SBA Region 9 Communications Director. “That’s going to include payroll records, documentation filings, there’s a lot of proof that these businesses have to show proving they paid their employees.”
However, the PPP loans are still a sweet deal even if a company repays the money.
“They were able to benefit from this extremely low interest rate the government was providing,” said Danielle Brian, the executive director of the Project on Government Oversight. “These are one percent loans … it’s essentially free money for them.”
Small business owners said the process passed them by.
“It seems as if a lot of the large companies were being taken care of by the banks first and the small guys like me were kind of left on the sidelines,” small business owner Joe Field told KGO.
“The entire process was a mess unless you were able to figure it out yourself or get professional help,” said Steve Mayer, an accountant and financial consultant. “The little guy, mom-and-pop people were completely passed over.”
“If somebody ended up with close to $1 million and had 14 employees, the math just doesn’t work.”
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