The Spanos family of Stockton owns the NFL's Los Angeles Chargers, one of the country's most successful apartment-development companies and a fortune estimated at $2.4 billion. It's a heavy donor to philanthropic causes and has etched the family name on hospital wings, sports complexes and other buildings in Sacramento and elsewhere.

The family also got a loan under the Paycheck Protection Program, the multibillion-dollar forgivable lending program created by Congress and the Trump administration to help small businesses weather the COVID-19 economic crisis.

Bell Wine Cellars, a Napa Valley winery co-owned by members of the Spanos family, qualified for a $197,100 loan from the Small Business Administration, the winery's chief operating officer told The Sacramento Bee.

The winery returned the money after reading media accounts of "the tremendous unmet demands for PPP loans and the funding shortfalls in the program," COO Brian E. Martucci said in an email.

When the initial $349 billion in funding for the Paycheck Protection Program dried up April 16, millions of potential borrowers were left frustrated, including hundreds in the Sacramento area.

In the days since, the program has been hit with another wave of criticism -- the availability of funding to large, wealthy corporate borrowers.

As the SBA began rolling out the second batch of Paycheck Protection loans this week totaling $310 billion, the program is reeling from reports about how money was doled out during the first phase.

The Wall Street Journal said at least $775 million went to companies whose stock is publicly traded. AutoNation Inc., the giant chain of car dealerships, received a $77 million loan. Ruth's Hospitality Group, the operator of the Ruth's Chris Steakhouse chain, got $20 million.

Other wealthy organizations to receive funding included the Los Angeles Lakers organization, which borrowed $4.6 million, according to the Los Angeles Times.

AutoNation, Ruth's, the Lakers and other big borrowers have returned the money as negative publicity poured in. The Treasury Department and SBA have tightened the eligibility requirements for the second round of loans, and Treasury officials said publicly traded companies should return their loans by May 7.

"It was inappropriate for most of these companies to take the loans," Treasury Secretary Steve Mnuchin said Tuesday on CNBC. He said the loan to the Lakers was "outrageous" and said big borrowers could face "criminal liability" if they don't return the money and are found to have lied on their loan applications.

These borrowers also could face major public relations headaches, said Phil Perry, a Sacramento PR executive who's been laboring to secure SBA loans for three businesses he operates.

"It's biting them in the hindquarters," said Perry, co-owner of Sacramento PR firm BPcubed Inc. He said companies that quickly returned the money will be more likely to be forgiven by consumers.

Davis biotech firm got coronavirus loan

Davis biotech executive Pam Marrone makes no apologies for securing a $1.7 million loan for her company, Marrone Bio Innovations Inc., whose stock is traded on the Nasdaq market.

"We qualify in every way as a small business," she said. "We're little."

The anger at public companies securing loans isn't just a function of the borrowers' size and wealth. It's about the fact that public companies can raise money comparatively quickly by selling more shares.

"The intent of this money was not for big, public companies that have access to capital," Treasury Secretary Steven Mnuchin said last week.

Marrone, however, said companies like hers are struggling -- and must rely on help from the government to get through the coronavirus pandemic.

"Being a public company doesn't mean you have access to instant money," said Marrone, whose company makes eco-friendly pesticides and other farm products.

While Marrone Bio is more than a decade old, it's still yet to turn the corner towards profitability; it lost $37 million last year on sales of $29 million. It endured a financial reporting scandal; its former chief operating officer pleaded guilty last fall in a scheme to artificially inflate the revenues the company was reporting to investors.

When the coronavirus struck, "we needed to reduce our operating expenses," Marrone said. "The (loan) money allowed us not to lay anyone off. That's the whole purpose of the program. Marrone employs 150 workers, including 65 in Davis.

At least two other Sacramento area public companies received Paycheck Protection loans. Arcadia Biosciences Inc. of Davis, which makes pasta, CBD oils and other products, got $1.1 million. Executives from Arcadia couldn't be reached for comment.

ThermoGenesis Holdings Inc., a Rancho Cordova medical biotech company, received $646,000 in Paycheck Protection money.

Ironically, ThermoGenesis announced last month that it's developing a therapy designed to treat the coronavirus and already is marketing a test that can determine whether someone has already gotten COVID-19 and has developed the antibodies that would ward off infection.

Despite that promising work, ThermoGenesis still hasn't established itself yet as profitable; it lost $10 million last year and has racked up $236 million in losses since its founding in 1986.

A spokeswoman said top ThermoGenesis executives weren't available to discuss the government loan.

Spanos family donated to Sacramento causes

The Spanos name is familiar in many parts of California. A.G. Spanos Companies, based in Stockton, is a major developer of apartment buildings and master-planned communities. The Sacramento State Sports Complex is named for family patriarch Alex Spanos, who died in 2018, as is the heart and vascular center at Sacramento's Mercy Hospital. The family has donated to charities around the state for years.

The family got into the wine business in 2002, when Alex Spanos teamed up with businessman Ron Berberian to buy a controlling interest in Bell Wine Centers, which had been founded a decade earlier. Berberian is married to Alex Spanos' daughter, Dea Spanos Berberian.

"Members of the Spanos family are passive, minority partners in the winery," said Martucci, the winery's chief operating officer. The winery has no connection to the Stockton development company, he added.

The government hasn't disclosed a list of approved borrowers for the Paycheck Protection loans. Most of the loans that have surfaced have come from documents the publicly traded companies filed with the Securities and Exchange Commission.

Bell Wine Cellars is privately held but Martucci confirmed that it secured a Paycheck Protection loan in response to an inquiry from The Bee.

He said the criticism that's hit other big borrowers "was not a factor" in Bell Wine's decision to return its loan. Rather, the winery was influenced by reports of would-be borrowers getting left out and felt "the best course of action was to return the $197,100 in loan proceeds for others to access," he said.

The program was generally designed for companies with 500 or fewer employees, but companies found they could be eligible by employing 500 or fewer employees at each of their locations.

The new guidelines allow for loans to companies with more than 500 workers as long as they meet other criteria, including annual revenue limits. The limits vary by industry, with plumbing contractors allowed $16.5 million in annual sales, liquor stores $8 million and so on.

 

SBA strains to process loan requests

Of all the stimulus programs enacted by Congress to deal with the economic fallout from the coronavirus, the Paycheck Protection Program has proven to be arguably the most popular. The loans are forgivable as long as at least 75 percent of the money is used to meet payroll.

So perhaps it wasn't surprising that demand for loans has overwhelmed the SBA. When the second round of funding began early Monday, the federal agency's website imploded.

Borrowers seek funds through their banks, and the banks submit the applications to the SBA. For the first three hours Monday, Golden Pacific Bank of Sacramento was able to apply for one loan, said bank president Virginia Varela.

Experts believe the $310 billion will be swallowed up in a matter of days.

"Unfortunately there's a lot of people who aren't going to be served," Varela said. "This is just a drop in the bucket."

Perry, the public relations executive, is one of those hoping some dollars come through.

He was able to obtain Paycheck Protection loans for his PR firm and a restaurant he owns in Sacramento, Southpaw Sushi. He hasn't heard whether his third business, a Woodland restaurant called Burger Saloon, will get anything. He's had to furlough 42 of the 50 employees who work at the two restaurants.

Perry said the Paycheck Protection Program is frustrating in part because he hasn't been able to track the progress of his loan application -- a complaint echoed by other borrowers.

"It's hectic," he said. "You don't really know what's going on."

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