WASHINGTON — The federal government doled out at least $1 billion in emergency small-business loans since April to more than 21,000 tire- and auto-service-related companies in response to the economic hardships of the COVID-19 pandemic.
The billion-dollar total is based on Tire Business' analysis of data about the Paycheck Protection Program (PPP) released July 6 by the Small Business Administration (SBA).
The PPP loans were aimed primarily at saving jobs by providing low-interest loans to help businesses of 500 or fewer employees cover payroll costs and other related expenses. The SBA did not indicate how many jobs were retained because of the loans.
In total, $521 billion in PPP loans were given out to business as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Tire Business' analysis of data in six industry segments — tire manufacturers, retreaders, dealers, wholesalers, automotive repair and oil/lube shops — showed 21,217 companies received loans totaling between $1 billion and $2.2 billion.
The range is large because the federal information shows only a range, not a specific loan amount, for each company.
Tire dealers received the most funds among the categories tracked, with 5,765 companies classified as tire dealers receiving between $599 million and slightly more than $1 billion. The average for each business was between $103,850 and $186,643.
In this category, seven companies are shown in the maximum loan range of $5 million to $10 million: ATV Inc. (American Tire Depot) of Vernon, Calif.; Earl W. Colvard Inc. of Deland, Fla.; Commercial Tire Inc. of Meridien, Idaho; S&S Firestone Inc. of Lexington, Ky.; VIP Inc. of Auburn, Maine; Plaza Tire Service Inc. of Cape Girardeau, Mo.; and T&W Tire L.L.C. of Oklahoma City.
McCarthy Tire Service Inc. of Wilkes-Barre, Pa., is shown as having received five separate loans totaling at least $8 million and as much as $19 million.
Thirty-four companies received loans of between $2 million and $5 million, and 48 got $1 million to $2 million.
For many dealers around the U.S., the PPP loan provided much-needed funds for an industry that saw demand for tires and service drop significantly in the second quarter.
"It's so hard to find people anyway out here … that we decided to just hold on to everybody (during the pandemic)," Matthew Jensen, CEO of Jensen Tire & Auto Inc. told Tire Business in June.
He said Jensen Tire & Auto Inc., with 21 retail locations in the Omaha, Neb., metro area, got a boost from the PPP loans.
"When you don't have any revenues coming in at all, it was very helpful," he said. "It's one reason why we could hold on to our employees."
In April, Shane Robertson, president of Robertson Tire Co. with 14 locations throughout Tulsa, Okla., told Tire Business the PPP loan was useful.
"We sent out documents the day before they were officially accepting them," Mr. Robertson said, adding they saw funds April 16 and used them to cover the next payroll.
"We are using some of the funds to actually pay back any employee who lost wages while we reduced hours and sales were slow."
In the "retreaders" category, 193 companies received between $142 million and $246 million, making each loan worth between $738,000 and $1.3 million.
The Tire Retread & Repair Information Bureau (TRIB) said there was a big push to help members understand the process for applying.
"TRIB put a lot of effort into educating our members about the PPP and provided tools to help them successfully complete applications for the program," said David Stevens, managing director of TRIB.
"We're glad to see many of them benefiting from the program as it's so important to keep the retread industry strong and keep our country moving on retreads."
One company, Southern Tire Mart L.L.C. of Columbia, Miss., received the maximum loan of between $5 million and $10 million. Two others are shown in the $2 million to $5 million category: Custom Bandag Inc. of Linden, N.J.; and Border Recapping L.L.C. of El Paso, Texas.
In the "tire wholesalers" category, 803 companies received between $145 million to $269 million, which yields an average loan value of between $181,000 and $334,994.
The top companies in this category — Treadmaxx Tire Distributors Inc. of Ellenwood, Ga.; and Reliable Tire Distributors of Blackwood, N.J. — are shown in the $2 million to $5 million range.
In the automotive repair and maintenance category, 8,567 companies received between $223 million and $500 million. The average of each loan was between $38,000 and $85,000.
At the top of this category are Frank's Automotive Inc., a single location business in Tulare, Calif., and Cisa Lubes USA Inc., a Jiffy Lube franchise group in Charlotte, N.C., each with loans in the $5 million to $10 million range.
There are 46 companies in this category with "tire" in their corporate name, including two — Monteith Tire of Goshen Inc., Goshen, Ind.; and Calvert's Auto Service & Tire Inc. of Independence, Mo. — in the $1 million to $2 million loan range.
In the automotive oil/lube category, 5,765 companies received $148 million to $217 million. The average loan was worth between $25,585 to $37,710.
Only one company in this category, Team Car Care East, a Jiffy Lube franchise based in Irving, Texas, with more than 420 locations in 25 states, received a maximum-value loan of $5 million to $10 million.
Another 124 companies listed under the "tire manufacturing" category heading received between $160 million and $342 million, for an average loan value of $1.3 million to $2.62 million.
Of those 124 companies, however, only two actually produce tires: Giti Tire (USA) Ltd. and Setco Inc. A review by Tire Business revealed that the rest are made up of industry suppliers, retreaders, tire recyclers, dealerships, etc.
Giti Tire received the maximum loan amount, $5 million to $10 million, while Setco — a solid tire producer based in Idabel, Okla. — was in the $2 million to $5 million range.
As originally crafted, the PPP required those receiving a loan to spend at least 75% of it on payroll.
In early June, President Trump signed a bill that reformed PPP regulations to give small businesses added flexibility regarding how they could spend money awarded through the program.
Among the changes: extending the period of time businesses can use their PPP funding to 24 weeks from eight; and loosening the percentage restrictions on how the money can be spent, including dropping the payroll limit to 60%.
Since then Congress has drafted legislation, dubbed the "Paycheck Protection Small Business Forgiveness Act," that would eliminate unnecessary bureaucratic requirements and simplify the process for forgiving smaller loans, those less than $150,000.
More than 85% of PPP loans to small businesses are less than $150,000, according to the Specialty Equipment Market Association, one of four automotive aftermarket trade associations lobbying for passage of the bill.
Hollee Keller, editorial research coordinator, Plastics News, contributed to this report.