(WSPA) – The 2020 “Paycheck Protection Program” or PPP was part of an emergency funding plan passed by congress to give hundreds of billions of dollars to small business during the COVID crisis. It was designed to keep employees on the payroll during business shutdowns.
But 7 News has taken a closer look at where all the money went, and at one industry where some insiders say that taxpayer money was pure profit.
Russell Farr is a middleman. His company Greenco is a beer distributor, a vast refrigerated warehouse that stocks dozens of brands, linking brewer to buyer. In 2020, Farr said life in the middle has been especially profitable.
“It’s been the best year in our 104 year history,” Farr said.
When schools, restaurants and most business closed, Upstate consumers stocked up. In fact, Farr refers to “Shelter in Place” by its initials, “S.I.P.”. He said people stuck at home stocked up on his beer.
In March, while the overall economy slowed, Greenco sold 220,000 cases of beer. That’s nearly 30% more than the same month the year before.
In April, the trend continued.
So, Farr was surprised to get a call from his bank offering him $2 million in forgivable taxpayer financed loans. All he had to do to keep that money was promise not to lay anyone off.
“You were never going to lay anybody off?” asked 7 News reporter Gordon Dill. “Nope,” Farr said.
In fact, Farr said he was hiring new employees at the time.
It was April 3, right at midnight, when the financial floodgates first opened to what bankers called a tsunami of taxpayer cash.
“It was all hands on deck. It was trying to process as many applications from the small business client from a window that everyone perceived would close very rapidly,” Fred Green, president and CEO of the South Carolina Bankers Association, said.
That group was involved in helping banks, including many community lenders who had never worked with the federal government before, process the new PPP loans. They’d become financial middlemen.
“The banks role was to be a conduit. The bank could not approve or deny a loan,” Green said. “The bank would gather the data and send it off to the SBA (Small Business Administration).”
The federal government would approve $5.7 billion in PPP funds for 63,000 South Carolina businesses. The bankers association estimates the bailout saved nearly a quarter of the state’s workforce, about 650,000 jobs.
“I can say with a high level of confidence that it went to the people who needed it,” Green said.
But 7 News did identify some who appear to have accepted the cash despite having a very profitable year, including some beer wholesalers.
7 News looked at records provided by the South Carolina Department of Revenue. Beer distributors pay taxes on each case of beer they sell, so there’s a state record of their monthly sales.
Total Wholesale Beer Cases Sold By Distributor in SC
Carolina Beer Company of Anderson sold more cases in March and April of this year than in the year before. But they also accepted between $350,000 and $1 million taxpayer dollars through the PPP. The company managers have not responded to questions about the loans.
Budweiser of Spartanburg accepted the same amount of bailout cash, even though they, too, sold more beer in those two months of 2020 than in 2019 according to state records.
They also did not return calls for comment.
B and B Distributors of Rock Hill accepted between $1 and $2million taxpayer dollars despite rising sales. CEO Rick Bridges said there was “never a plan to lay people off,” but that there were confirmed COVID cases among his employees and he said the company accepted the money because of economic uncertainty.
Russell Farr was offered $2 million and decided to refuse the offer.
“It just didn’t seem right taking taxpayers money to bail us out when we didn’t need bailing out,” Farr said.