Deb and Scott Dodson were out of options last spring at their Waxahachie bowling alley, Hilltop Lanes, after being shut down more than two months when the COVID-19 crisis swelled in Texas and nationwide.
Banks weren’t lending. They told their 20 employees to collect unemployment checks until the bowlers could come back.
But just as Gov. Greg Abbott gave the OK for bowling alleys, bars and a handful of other businesses to reopen, the Dodsons and Hilltop Lanes were given a $63,240 Paycheck Protection Program loan from the federal government to help get their business ready to roll again.
“It all went to employees and it was just what we needed,” said Deb Dodson, a lifelong bowling enthusiast who bought Hilltop Lanes four years ago with her husband. “And people have come back. We are busy again. Not as busy as we were, but our customers have come back.”
Hilltop Lanes was one of 128,000 businesses in North Texas that received forgivable PPP loans totaling more than $13.7 billion, according to data released by the Small Business Administration and compiled by The Dallas Morning News. The $669 billion business relief program helped establishments with 500 or fewer employees cover payroll and other necessary business costs as part of the broader $2 trillion stimulus package known as the CARES Act.
While the loan program was widely criticized for being hastily put together and underestimating the length and severity of the pandemic-induced recession, economists and business groups say it saved thousands of businesses and possibly hundreds of thousands of jobs in North Texas alone.
“The PPP loans were a lifeline to many of these businesses,” said Robert Dye, chief economist at Dallas-based Comerica Bank. “It was a very strong and important part of keeping businesses functioning.”
Dye said the business loans were a necessary part of the multipronged attack the government used to slow the pandemic’s damage. The CARES Act included $260 billion for added unemployment benefits, $300 billion in cash payments for every American household and billions more in stimulus for the financial markets.
Hilltop Lanes is one of literally thousands of stories in North Texas about how economic stimulus kept businesses afloat. Perhaps with so many, it’s helpful to pull back and take a broader look at the impact on the region.
$13.7 billion went to 128,127 businesses
The median PPP loan in North Texas was $22,500. But that was only a fraction of the aid extended in the region.
Nationwide, the federal government made 5.2 million loans totaling $525 million. A chunk of money is unallocated and Congress is deciding exactly how to bundle that money into a potential next bill that could be used by the same businesses that received loans in the bill passed in March.
The funds were intended to cover about eight weeks of expenses and based on the number of employees and salaries for businesses that were operating in 2019.
The program was designed to carry businesses through a much shorter pandemic, said Herbert Austin, district director of SBA’s Dallas-Fort Worth office.
“If it wasn’t for the PPP program, a lot of small businesses would have shut down forever and never reopened,” Austin said. “I wish it would have lasted for longer.”
That $13.7 billion is money that will likely stay in the economy. The loans will be entirely forgivable, as long as businesses used them to cover expenses incurred because of the crisis. The U.S. Treasury Department said in October that it is streamlining the process to forgive loans under $50,000 while it makes time to better vet larger loans.
An additional $447 million was given out to 5,500 businesses through another part of the CARES Act called Economic Injury Disaster Loans. Those loans have a 3.75% interest rate and are deferrable for a year.
Also, $526 million was given out in EIDL advance loans, which are similar to the other EIDL program but capped at $10,000 and completely forgivable for businesses that needed the money to get through the worst of the pandemic.
Businesses still hurting are eagerly awaiting congressional action to bring the program back, Austin said. The newest stimulus package proposal includes $300 million for SBA loans, but it’s unclear if congressional leaders will agree to that.
Small businesses dominated the PPP
More than half of all the money in North Texas, about $7.1 billion, went to businesses that had fewer than 50 employees.
That was true for businesses like Hilltop Lanes, which helped employees file for enhanced unemployment pay when it closed. The Dodsons told their 20 employees, most part-timers, to return when the alley reopened.
It’s taken months for sales to pick back up. Capacity is still limited, but Deb Dodson said the alley’s 16 lanes don’t come close to the building’s 260-person limit, even with four people to a lane.
Leagues restarted in summer and are now full. Weekend birthday parties came back, although they’ve slowed in recent weeks.
Some things have changed. There are fewer casual bowlers coming in after league play is done. On many nights, Hilltop Lanes closes early.
But thanks to the careful bookkeeping of Scott Dodson, who was an accountant before the couple bought the alley, Hilltop Lanes has stayed profitable.
“If you buy a bowling alley to get rich, you are in the wrong business,” Deb Dodson said. “But we aren’t losing money either.”
Some of the smallest businesses were first in line for the stimulus money. Nearly half of the number of loans in North Texas went to businesses with two or fewer people.
Big employers took in big loans
About 1.2% of Dallas-Fort Worth businesses accounted for 25% of all loans. That’s because those 1,524 larger PPP loan recipients account for about 25% of all jobs supported by the PPP program.
Almost 130 employers in the region took in the maximum amount — $10 million — in loans.
Among those employers are familiar names. Dallas-based Studio Movie Grill, which filed for bankruptcy in October, received $10 million, along with restaurant chains such as TGI Friday’s, Mimi’s Cafe, the parent company of Mi Cocina, Pei Wei, Zoës Kitchen and law firm Thompson and Knight. Other top recipients included hotel chains, staffing firms, fast-food franchises and trucking companies.
The SBA released data in July on 15,556 businesses in North Texas that received PPP, but only gave a range of loan amounts for those firms. The new data shows the exact amount companies received, along with the number of employees the companies claimed to get their loans.
Doctors, restaurants and other big loan recipients
No industry tapped the loan program more than doctors’ offices, according to the SBA data. Restaurants, real estate agents, lawyers and dentists were among other top recipients.
Some 3,900 North Texas doctors took out more than $434 million in loans. The loan total was bested only by full-service restaurants, which received $638 million for 3,743 firms.
It’s not surprising that doctors needed help during the worst of the pandemic, especially because many patients may have been scared of interacting with potentially sick people, said Tom Banning, CEO of the Texas Association of Family Physicians.
“In late March and April and May, you saw practice volume drop by 50% to 70%,” Banning said. “Physicians have incredibly high fixed overhead costs.”
While hospitals got a big chunk of stimulus money through Medicaid and Medicare grants, individual doctors were not included.
Doctors have a lot of employees depending on them, too, Banning said. Loans to those 3,900 doctors helped support 33,866 jobs, the data shows.
Unfortunately, Banning said, small medical offices still haven’t recovered fully and may not for many more months. He said the COVID-19 recession will likely accelerate the trend of independently owned practices selling to large hospital groups and private equity funds.
“When you look back at previous recessions, people thought the medical industry was recession-proof because people still got sick, people still needed their chronic illnesses managed,” Banning said. “No one was prepared for a scenario where we have a public health crisis and people stop visiting the doctor.”