Just when you’ve got a sore neck from shaking your head over the stuff you read and learn about Meridian Energy Group, the company that wants to put a refinery beside our national park . . . there’s this.
In spite of the fact that there is no oil refinery, and the only business the company seems to be doing is selling stock in a yet-to-be-built-refinery, it appears that Meridian has received two federal Paycheck Protection Program loans of at least $850,000, totaling $1.7 million. You’ve heard of those “loans.” They’re not really loans. They’re gifts from the federal government to help companies meet their payroll costs during the Coronavirus pandemic.
They start out as loans from a local bank, but the loans are then forgiven and the bank is repaid by the government if the funds lent are used for legitimate purposes, such as employee payroll checks, and mortgage payments, so the employees have a place to work. The program was designed to keep retail stores and service businesses open during the pandemic, and it’s been a critically important program to help small businesses survive.
The program is administered by the Small Business Administration, and according to the SBA’s website, America’s banks have lent $792,440,117,214 to small businesses so far. For English majors like me, that’s more than $792 billion. With a B. The SBA has received applications for loan forgiveness totaling $610,036,142,164. That’s more than $610 billion. With a B. And so far, the SBA has repaid the banks $587,322,204,209. That’s $587 billion. With a B.
The first PPP loan to Meridian, made by Sunwest Bank in Irvine California, was for $853,800, approved on April 13, 2020, just 10 days after the Congressionally approved program went into effect. At the time, Meridian still had offices in an office park in the Los Angeles suburb.
I first learned of Meridian’s participation in the program from my friend Laura, who lives near the site of the proposed refinery, just three miles from the boundary of Theodore Roosevelt National Park. It didn’t take much digging online to find out the details of Meridian’s business deals.
The loan amount was determined using the company’s average 2019 payroll costs. On their loan application, Meridian claimed to have 41 employees whose jobs would be retained if the company received the loan of $853,800.
The SBA rules say the company must “provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs. Loans can be for up to two months of average monthly payroll costs from the last year plus an additional 25% of that amount.”
Y’know, I’d kind of like to get my eyes on that documentation. Since these forgiven loans are being paid back with our tax dollars, I’d think that maybe that is public information. I’ve got a friend who used to work for the SBA. I’m going to call him and ask him how I might go about doing that.
I’ve already learned a little bit about it from a website called FederalPay.org, which maintains a database of the PPP program loans. FederalPay.org is a free public resource designed to provide information to United States Government employees. If you go to that website, up near the top you can click on Meridian’s 2020 loan box on the right side of the page to see the loan details.
“Based on the standard PPP eligibility formula, it may be possible to estimate the payroll expenses represented by a company on their PPP application,” the website says. “In order to qualify for the PPP loan amount received, Meridian Energy Group, Inc’s 2019 payroll expenses are estimated to be at least $4.1 million.”
“Based on their reported 41 jobs retained, this equals an estimated average yearly compensation of $99,957 per employee,” the website concluded.
Wow. Not a bad company to work for. I wonder how many other small businesses pay their employees an average of almost $100,000 a year. Of course, the salaries of the ten vice presidents plus the CEO and President probably bring the average up a bit over the clerical staff.
What’s interesting about all that is something the website included down in the fine print at the bottom of the report:
“If a company’s reported number of employees divided by the maximum PPP range amount per the SBA is greater than $100,000, the estimated maximum PPP loan received by the company can be adjusted down to assume no more than $100,000 yearly salary per employee was used in the PPP application. While employees at the company may earn more, $100k / employee is the maximum amount that can be used in PPP eligibility calculations.”
Well, isn’t that convenient! Meridian’s requested loan amount worked out to be just $43 per year per employee UNDER the $100,000 listed in guidelines. Whew! That was close! It kind of reminds me of their refinery application here in North Dakota. Back in 2017, the company first announced they would be processing 54,000 barrels of oil per day, but when they found out that they would have to undergo an environmental site review if they processed more than 50,000, they quickly adjusted their request to 49,500 barrels per day. Whew Again! As I wrote almost 4 years ago, Meridian escaped an environmental site review by the Public Service Commission which, our state law says, would be done to “ensure the location, construction, and operation of energy conversion facilities … will produce minimal adverse effects on the environment and the welfare of the citizens of this state …The policy of this state is to site energy conversion facilities … in an orderly manner compatible with environmental preservation and the efficient use of resources. Sites and routes must be selected to minimize adverse human and environmental impact …” (emphasis added)
Yeah, that site review might have said they probably shouldn’t put their refinery so close to a national park. But I digress. Back to the Federal Pay website, which says the status of the $853,800 loan today is “Paid in Full or Forgiven.” Want to guess which one applies?
Then, in December of 2020, the Congress approved a second round of loans with the forgiveness clause. Once again, within days, Meridian was back at the trough, with a second loan from Sunwest Bank for $853,813 ($13 more than the first loan. What’s up with that?) to retain 39 employees (two fewer than the previous year–you’ll recall I reported yesterday that a couple of the company’s vice presidents quit last winter). According to the Federal Pay website, this loan has not been paid off or forgiven yet. You can see the loan details if you go back to the Federal Pay website and click on the 2021 box on the left. I’ve got a call in to the Sunwest Bank office in Irvine to find out what they expect to happen with this one–“Paid in Full or Forgiven.”
There’s a second website called ppp-loan.info which tracks these loans as well. And they include demographic information about the borrowers on their website. In a glance at the loan info on Meridian’s second loan, dated January 20, 2021, it says that Meridian is a small business in the refining industry with 39 employees and is owned by a male veteran of Asian ethnicity. I’ve looked at a picture of Meridian’s CEO William Prentice on his website. He doesn’t look Asian to me. But he’s not really the owner, since Meridian is a corporation with lots of stockholder “owners.” But I’m guessing the words “veteran” and “Asian” on the loan application didn’t hurt in getting the loan approved by Sunwest. I’m sure there’s a least one Asian and one veteran stockholder.
It also shows that Meridian had moved out of its office park headquarters and into Mailbox C-333 in the strip mall by January 20 of this year. That $853,000 certainly increased the average net worth of their fellow tenants who had boxes 1-332.
What puzzles me a bit is where those 39 employees worked, and what they did, since Meridian had closed its offices by the time they applied for the second loan, according to their application. I suppose they could be hanging out at Yummy Yummy and Ding Tea and Drips Creamery and some of the other neighbors to Mailboxes and More, home to Meridian’s new address.
Another good reason to get my hands on those SBA documents.
In spite of the fact that the company apparently has received $1.7 million from the PPP program, the employees who sued the company for $600,000 in back pay still haven’t been paid, as I reported yesterday. I’m guessing that’s because the rules of the PPP program say the loans can only be used to pay current employees, not to settle lawsuits.
Well, anyway, we’ve all agreed that the PPP, which ended in May of this year, was a great program to help small businesses survive the pandemic. But obviously it was ripe for abuse. Hard to believe that a gift of 1.7 million dollars to companies like Meridian is a good use of our taxpayer dollars.
I’ll let you know if I learn any more when the loan officer from Sunwest calls me back. Uh huh. Don’t hold your breath waiting for that. I’m not.
And thank you, Laura, for the tip.