17 Covelli Entities Get Combined $43M in PPP Loans
YOUNGSTOWN, Ohio – Covelli Enterprises – or rather the Warren food service company and 16 entities directly connected to it – received $43.4 million from the federal government’s Paycheck Protection Program. Even so, that funding was sufficient to retain just 14% of its workforce of 35,000, SBA documents show.
Covelli Enterprises owns and operates Panera Bread, O’Charley’s and Dairy Queen franchises across the country. While its headquarters is at 3900 E. Warren St., the company also has an office in Columbus and three in Florida, where at least two of the entities are based. All 17 PPP loans list 3900 E. Market St. as their address and were approved in the first two weeks of April.
Four of the Covelli PPP loans are among the 10 largest in Mahoning, Trumbull and Columbiana counties.
Huntington National Bank channeled 16 of them through the U.S. Small Business Administration. The 17th Covelli loan went through the Bank of Tampa.
In response to a lawsuit filed by several news organizations, the SBA complied with a court order late Tuesday and released detailed information on every business that received a PPP or Economic Injury Disaster Loan. More than $700 billion in forgivable loans were awarded nationwide.
CLICK HERE to read PPP list, in descending order, of companies in Mahoning, Trumbull and Columbiana counties that received PPP loans.
PPP loans, authorized in the Cares Act, were designated for small businesses, which the federal government defines as companies that employ no more than 500. Loans were capped at $10 million but given the predominance of multiple locations in the restaurant and hotel industry, these companies were exempted from the cap.
Pre-pandemic, Covelli employed more than 35,000 full- and part-time workers, according to its website. The 17 PPP loans its entities received were to retain 4,872 jobs, SBA documents show. Eight of the loans listed 500 jobs to be retained (the maximum). The remaining nine listed job retention numbers ranging from 250 jobs to 51.
Among Covelli’s 17 PPP loans, the company’s largest, $7.06 million, went to CAD Capital LLC, which was incorporated in October 2019 by Sam Covelli, CEO of Covelli Enterprises, “to own and operate restaurants in the Columbus, Ohio, area,” according to incorporation documents.
Nearly $6.5 million was provided to Dalcan LLC, an irrevocable trust set up by family patriarch Albert M. Covelli in May 1998.
The smallest loan to a Covelli entity, $112,615, went to Sylcon LLC, which was incorporated outside Ohio.
Only two companies in Mahoning, Trumbull and Columbiana counties — Schwebel Baking Co. in Youngstown and AVI Foodsystems in Warren – received the maximum $10 million loan. Each retained 500 jobs.
“We definitely used the money the way it was intended,” said Dan Gentile, chief financial officer of Schwebel Baking Co. “It helped keep our bakery employees at work during the economic uncertainty we faced.”
One affiliate, Schwebel Banking Co. of Pa. Inc., received $1,767,000 from the forgivable loan program, while Schwebel Baking Company of NY Inc. received $542,200.
All three entities list 965 E. Midlothian Blvd. as their address.
Gentile said when the shutdowns began in March, Schwebel’s saw “strong business at the outset. A lot of people were panic buying.”
But through the summer, as restaurant and entertainment businesses suffered, so did the bakery’s bulk sales.
“Overall, our business is doing fine at this point,” he noted.
For Dearing Compressor and Pump Co., the $3.8 million PPP loan it received – 17th-highest in the three-county region – enabled the company to keep its “200-plus employees on the payroll, with full benefits,” said Rick Dearing, president and CEO.
Dearing Compressor provides products and services for the industrial and energy markets.
“Depending on the segment of our business, some are [doing well], others are slow,” Dearing said. “When the world shut down, the bottom fell out of demand for oil and gas. Our industrial work is good. But that outlook is uncertain and on top of that, with the presidential change coming, the politics of Washington greatly impact the energy industry.”
The change in administrations likely will affect how COVID-19 relief loans will be administered going forward – regardless of whether there is another round of funding.
“Part of the problem with the [PPP] application and forgiveness is that the rules keep changing,” said Schwebel’s CFO Gentile. “Now we have an election and we’re wondering if the rules will change again. We have to keep running scenarios about what happens if our loans are forgiven, or if they’re not.”
Pictured at top: Covelli Enterprises headquarters in Warren. Image via Phillips Sekanick Architects.
Copyright 2021 The Business Journal, Youngstown, Ohio.