PPP loans keep Maui businesses afloat, but future is uncertain
Some see revenue, clients return, while others waiting
Multimillion-dollar loans under the federal Paycheck Protection Program have helped keep many Maui businesses and nonprofits afloat, but some are worried that another surge in cases and the delayed return of tourism could set them back again.
“The good news for us is that the census (at the facilities) has risen again, so we stabilized,” said Wesley Lo, CEO of Hale Makua, the largest Maui County recipient under the program. “But if there’s another spike or the same thing happens again, it potentially could cause problems.”
Hale Makua secured a PPP loan of just over $5 million, the only Maui County organization and one of 20 in Hawaii to receive a loan between $5 million and $10 million.
The U.S. Small Business Administration program offered forgivable loans to help companies pay employee salaries and cover costs like utilities and rent. Businesses, nonprofits, schools, health care services, contractors, restaurants and hotels across Maui County applied for the program.
According to SBA data, nine organizations on Maui received between $2 million to $5 million through the program, including Hoaloha Na Eha (owners of the Old Lahaina Luau, Star Noodle and Aloha Mixed Plate), JD Painting and Decorating, Ka’anapali Beach Hotel, Mama’s Fish House, Maui Medical Group, Napili Kai, PWC Hawaii Corp., Valley Isle Produce and Exceptional Inc. (doing business as Employers Options and Horses R Us).
Another 29 businesses earned loans of $1 million to $2 million, including nonprofits like Aloha House and Community Clinic of Maui, restaurants like Duke’s and Merriman’s, contractors like T.J. Gomes Trucking Co. and West Maui Construction, energy companies like Pacific Biodiesel and Rising Sun and a school, Seabury Hall.
Scores of other businesses were approved for loans under $1 million.
Lanai Community Health Center received a loan in the $350,000 to $1 million range and was the only organization on the island to earn PPP aid over $150,000.
Friendly Market Center, one of the major grocery stores on Molokai, also received a loan between $350,000 to $1 million, while Molokai Drugs and Molokai Properties each got loans between $150,000 to $350,000.
Many more businesses were awarded loans under $150,000; the names of those organizations were not provided in data released by the Small Business Administration on July 6.
As of July 24, the SBA had approved 5,005,261 loans worth about $519.5 billion, including 24,779 loans worth nearly $2.5 billion to Hawaii. The loans initially called for covering expenses over an eight-week period with loan forgiveness if at least 75 percent was used for payroll. An extension program was created that covered 24 weeks with 60 percent of funds having to be used for payroll.
While some recipients are starting to see their revenues back on the rise, others — particularly the tourism-reliant companies — are still missing the largest part of their customer base.
Patients start to return
When a Hale Makua nursing home resident and two home health patients tested positive for the virus after being exposed to a cluster at Maui Memorial Medical Center in mid-April, the nonprofit took a big hit.
Most of their admissions came from Maui Memorial, so turning away hospital discharges to prevent further cases also meant a decline in revenue.
“When we had the COVID case, we lost quite a bit of volume for a short period of time, because we weren’t admitting anybody,” Lo explained.
Before the pandemic, the nonprofit’s Kahului facility averaged about 220 people a day, which included long-term residents and patients passing through for shorter-term services like rehab. After the first COVID case, those numbers dropped almost 16 percent to 185. The number of home health patients went from an average of about 80 down to 50 or 60.
Hale Makua also no longer offers its Adult Day Health program, which was averaging 30 to 35 seniors at the time it was shut down in early March, to keep the outer community from potentially exposing long-term residents.
Lo said the PPP loan, which Hale Makua was approved for on April 10, helped cover payroll for its 480 staff and purchases of personal protective equipment. Without the funds, Lo said they would have had to lay off people and potentially close more beds and services, which would have put the community in a bad spot if the hospital had a surge.
Now, numbers are climbing back up, and the Kahului facility is averaging more than 200 long-term residents and short-term clients a day. The Wailuku facility has stayed fairly constant at 75, mostly long-term residents.
“We still understand it’s a loan,” Lo said. “We’re still being very cognizant and cautious of it. But thank goodness, I gotta say, for the PPP loan.”
At Maui Medical Group, which received about a $4 million loan, a drop in patients also hit the clinics hard.
“Like everybody else, we basically shut down because patients can’t come in to see us,” Administrator Cliff Alakai said.
Maui Medical Group, which serves 38,000 patients over its five clinics, had to furlough 138 of its 346 staff to keep costs down but also to ensure they’d have people on reserve if the clinics suffered an outbreak. Rotating staff in and out and cutting back doctors’ schedules reduced the chances that they’d lose all their providers at once, Alakai explained.
Patients were also afraid to come in, and Maui Medical Group went from seeing roughly 1,000 a day to 400 to 500. While insurance companies still paid Maui Medical, the clinics stopped collecting from patients during April because many were out of work and unable to pay their portions.
The PPP loan gave Maui Medical cash flow to continue covering salaries, and as restrictions were lifted and patients started returning, things began to improve. In May, Maui Medical started billing again.
“We’re getting back to where we used to be, probably 800 to 900 (patients) a day,” Alakai said. “People are more comfortable. . . . They understand the virus.”
Alakai added that the clinics have been fortunate to have not had an outbreak; only one Maui Medical Group provider who worked solely at the hospital ended up contracting the virus. However, with the uncertainty of the pandemic, Alakai said “we just don’t know” how Maui Medical is going to fare in the future.
“With this current wave resurfacing on Maui, we’re cautious right now, because should things take a very bad turn for the worst, we gotta be able to survive that too,” he said.
Still waiting on the tourists
Hotels, meanwhile, aren’t seeing the return of their main patrons — the tourists. With a 14-day quarantine still in place and plans for a pre-travel testing program delayed, visitor numbers continue to be low and many major hotels remain closed.
Ka’anapali Beach Hotel, one of the nine businesses to receive a loan in the $2 million to $5 million range, had to lay off about 60 to 70 percent of its 300 employees, said General Manager and former County Council Member Mike White.
White said that because many workers were having a hard time getting onto the state unemployment system and facing a lengthy gap between their last paycheck from the hotel and their first paycheck from the state, the hotel decided to apply for the PPP loan.
He declined to say exactly how much the hotel received but said the loan went toward covering all workers’ salaries just beyond June 30, with staff rotating in and out due to the “stay at home” and social distancing mandates. After that, most of the workers had to go back on unemployment.
However, the PPP loan did allow the hotel to pay for medical benefits for a longer period of time, and “at this point it looks like we’re going to be able to cover them easily through the end of the year,” White said.
About 230 to 240 employees are represented by the International Longshore and Warehouse Union, which is funding their medical insurance. The rest are covered by the hotel.
When asked why the hotel didn’t pull some of the funding from its renovation project to pay for salaries, White said that the hotel had already signed a contract for the work. They were counting on room revenues to help cover salaries, but that changed with the pandemic.
“To go from a 98 percent occupancy level of revenue to zero is stunning,” White said. “This had never happened in the recession in 2008 and September 11th.”
Without guests, the workers who are still employed have been helping with ongoing hotel projects and the renovation, which includes building a new restaurant, renovating 264 rooms and adding a fourth floor to the parking garage.
“We’re hoping sometime by the first quarter (of next year) we’ll be up to a reasonably full staff, but it’s anybody’s guess right now,” White said.
At Mama’s Fish House, another visitor-reliant business, most of the workers have been laid off, with just a handful of staff kept on for maintenance, human resources and accounting, General Manager Tami Joslin said.
According to SBA data, Mama’s was one of the largest Maui County employers to receive PPP aid, with 373 employees. Joslin declined to reveal the exact loan amount, but said it’s going toward the salaries of just the employees who have stayed on.
“We haven’t been able to be open, so that’s basically what it’s doing for us,” she said of the loan. “We’re trying to just survive and take care of expenses that don’t go away when you’re closed down.”
The award-winning restaurant and inn closed on March 19, and Joslin was unsure when they might reopen and rehire employees, given how things are “starting to spiral out of control again.”
“There’s a lot of people that have gotten a loan and they used all of the loan and they’re completely stuck,” Joslin said. “Who would’ve thought in the beginning that it was going to drag on like this? Nobody had any idea. . . . After being in business for as long as we have been, the last thing we want to do is close our doors. We’re just trying to stay afloat.”
Finding new business
Meanwhile, a local cleaning company is also hopeful it can bring back all its employees with the help of the PPP loan, though it’s keeping a tentative eye on tourism.
The PWC Hawaii Corp. — better known as The People Who Clean — received a PPP loan of $2.3 million, according to Vice President and General Manager Ron Gess. The business did a lot of work cleaning hotels, so when the pandemic hit and tourism ground to a halt, PWC lost multiple contracts “within days of each other,” he said.
Prior to the pandemic, the company had about 320 employees — a number that rose and fell with jobs — including about 200 on Maui, 100 on Oahu and the rest on Molokai, Lanai, Hawaii island and Kauai.
After business declined, PWC had to lay off a large portion of its staff, dropping to 200 overall, including about 90 on Maui.
While the company obtained some smaller contracts doing light maintenance on shuttered hotels, they also landed a variety of jobs outside the tourism industry, including schools in need of sanitation during the pandemic, such as Seabury Hall and Lahainaluna High School. They also did cleaning for construction projects, like the Kenolio Apartments in Kihei and for the PX at military bases on Oahu.
PWC was approved for a PPP loan on April 8, and Gess said the only drawback at the time was that they had to use it in eight weeks, which was difficult because they had laid off much of their staff. Extending the loan period to 24 weeks gave them a bit of breathing room.
“A lot of our people have returned. We’ve gotten a lot busier, and so we’ve used the funds to pay people, which was the intent,” Gess said. “So it’s worked out very well for us.”
One of the requirements for loan forgiveness is to bring back all staff by the end of the year for the extended period, said Gess, who’s hopeful the company can do so by then.
“As long as tourism comes back, I actually think it will be sooner than that,” he said.
Much has changed for PWC. Even as a cleaning company, they’ve “learned a lot in regards to disinfecting and sanitizing” in the new era of COVID-19. They’ve invested in a lot of masks and gloves and do temperature checks on employees every morning. The last quarter of the year, after the PPP loan runs out, will prove crucial, but Gess believes the 47-year-old company will survive.
“I think we’ll make it to 50 years,” he said.
The full PPP loan data can be found at home.treasury.gov /policy-issues/cares-act/assistance-for-small-businesses/sba-paycheck-protection-program-loan-level-data.
* Colleen Uechi can be reached at firstname.lastname@example.org.
FOLLOWING THE MONEY
Hundreds of Maui County businesses, nonprofits, restaurants, hotels and contractors applied for and received loans under the federal Paycheck Protection Program. The following is a list of organizations that received loans over $1 million and the number of employees (if provided), according to the U.S. Small Business Administration. Names associated with the companies in the state business database or with the address provided to the SBA also are included.
$5-10 MILLION EMPLOYEES
Hale Makua*, 480
• Exceptional Inc. (Employers Options, Horses R Us), not provided
• Fearless Inc. (Mama’s Fish House), 373
• Hoaloha Na Eha, not provided
• JD Painting & Decorating, 111
• KBHL LLC (Ka’anapali Beach Hotel), 284
• Maui Medical Group, 346
• Napili Kai, 188
• PWC Hawaii Corp. (The People Who Clean), 320
• Valley Isle Produce, 166
• Aloha House Inc.*, 157
• BC Restaurant Operator Inc. (Merriman’s Kapalua), 118
• Castaway Construction & Restoration, 46
• Community Clinic of Maui,* not provided
• Coon Brothers Inc., not provided
• Duke’s Maui, 190
• Hale Mahaolu*, 104
• Hi’ilawe Construction, not provided
• HI-Built, 80
• IP 1 (Monkeypod Kitchen by Merriman Wailea), 69
• JDH Construction Ltd., 90
• Leilani’s Restaurant LLC, 188
• Mani Hana Resort, 166
• Maui Kupono Builders, 54
• Maui Soda & Ice Works, not provided
• MPK3 LLC, 85
• MTP Operating Co,
(Maui Tropical Plantation, The Mill House), 242
• Pacific Biodiesel Technologies, 90
• Rising Sun LLC, 107
• Sea Sport Cruises, not provided
• Seabury Hall*, 195
• Soleil Management Hawaii LLC, 168
• T.J. Gomes Trucking Co., 53
• Tri Isle, 82
• TS Merriman (Hula Grill Kaanapali), 201
• TY Management Corp.
(Kapalua Golf Academy, Kapalua Tennis Garden, The Bay Course, The Pineapple Grill at Kapalua, The Plantation Club Golf Course, The Plantation Course), 117
• Wailea Golf LLC, 0
• WC Maui Coast LLC (Maui Coast Hotel), 75
• West Maui Construction, not provided