33 PPP loans, one company: How a WA drive-thru coffee chain got millions in COVID-19 funds

SEATTLE — A chain of drive-thru coffee stands in Western Washington received $2.5 million from the Paycheck Protection Program, a prime example of how the pandemic relief bill intended for small businesses benefited companies with deeper pockets and better financial connections.

Bigfoot Java had more than 30 locations in seven Washington counties when the pandemic hit last spring, and each received an individual PPP loan, averaging $74,000. An associated real estate and investment company, Bigfoot Properties and Bigfoot Investment Group, also received separate loans. The company employs more than 500 people, an average of 16 employees per location, based on jobs reported in Small Business Administration data and information from former employees.

State records indicate the drive-thru chain belongs to Al Jiwani and Jennifer Whitmore. Jiwani’s name appears, too, on documents affiliated with Trimark Student Housing, a system of off-campus housing near the University of Washington in Seattle, and Trimark Hospitality, which owns 14 mid-tier hotels in five states. Their PPP loans totaled $4.96 million.

All of the entities tie back to a single address, 420 Ellingson Road, in Pacific, Washington.

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There a Bigfoot Java sign sits in the corner ground-floor window of the nondescript office building, a Subway and cigar shop next door. Visible from the street is a Bigfoot Java drive-thru coffee stand, a 76 gas station, Pit Stop Express convenience store and White Glove Car Wash — all of which are listed as brand names on the website for Trimark Petroleum Group, another arm of the Jiwani enterprise. Several of those entities received their own $2.95 million in PPP funds.

Yet another LLC, Trimark Property Group, operates seven shopping plazas in Western Washington, whose tenants include Safeway, Jack in the Box, Starbucks, Hobby Lobby and Whistle Workwear.

The company did not return repeated requests for comment via phone, including multiple voicemails, or email, sent to more than a dozen people listed on its various websites. The News Tribune visited the office in person, where a woman at the front desk directed us to email Jiwani and Whitmore. A call to a number listed on the Trimark Student Housing website was answered, but the man on the other end deemed our inquiry “inappropriate.”

The coffee stands, open 24 hours, never closed during the pandemic, having been deemed “essential” and not having anywhere for customers to sit anyway. Bigfoot Java is in the process of building another seven locations, according to its website.

“I don’t have all the facts in this case, but it does not appear that what the company did was improper,” said Jennifer S. Fan, a small business attorney and director of the Entrepreneurial Law Clinic at the University of Washington. “It does raise questions about the equity of how the funds were distributed though,” she added, and “points to larger problems” with the program.

These loans will likely never be audited by the Small Business Administration, the federal department tasked with overseeing the federal stimulus package known as the CARES Act, because each falls well under the $2 million threshold promised for such accountability. The hastily written bill was intended to rescue small businesses suddenly reeling from the effects of a pandemic by offering forgivable loans for keeping employees on payroll; it was later adjusted to allow spending on other costs like rent and utilities.

Bigfoot Java was eligible for PPP thanks to an exception for franchises and chains that allowed any business with fewer than 500 employees per location to apply — a move that benefited some of the wealthiest restaurant chains in America, including franchises of McDonald’s, Subway and Dunkin’.

“They were able to take advantage of the program and navigate within it because of the way that it was structured,” said Fan of Bigfoot’s PPP tally. The program valued “speed and efficiency over accuracy or equity. If the program had been administered and structured differently, it could have helped more people.”

An analysis by The News Tribune, for instance, found that the largest 10 loans to restaurants in Pierce County, including a regional franchise owner of several Domino’s Pizza stores, accounted for nearly half of the total amount received by the local industry. Among the hundreds of restaurants that secured loans under $150,000 were franchises of publicly traded, multimillion dollar companies such as Dairy Queen, which is owned by Berkshire Hathaway, and Jack in the Box, whose largest stockholder is the megafund BlackRock. About 75 percent of Pierce County’s restaurant loans fell under $100,000.

Incorporated in 2000 as a self-described “investment group,” Bigfoot Java opened its first stand two years later, reaching 32 locations by 2012 — each with its own LLC.

Loans for the coffee stands, the investment group and the property management LLC were all approved within days of the PPP’s launch.

Bigfoot Properties IX, a stand near the Pierce County airport in Puyallup, received $86,300, second in the Bigfoot chain only to the Everett store that landed just shy of $90,000. The smallest of the 33 loans went to the shops in Bellingham ($53,500) and Burlington ($51,200), with the remaining 29 between $65,000 and $86,000.

Comparatively, Gravity Coffee, another Washington coffee shop chain, received a single loan of $694,000. The money supported all 17 of its existing stores, a combination of sit-down cafes and drive-thrus.

If Gravity, which declined to comment for this story, had double the locations, it would have the same number as Bigfoot. If Gravity’s PPP loans doubled, it would only equal half of what Bigfoot secured.

The Pacific Northwest is home to hundreds of little coffee stands, some that have grown to a dozen or more locations like Gravity and Bigfoot, but many are family-owned operations with one or two stands.

Rainier Valley Coffee Co., which operates three locations in Pierce County, received a single loan of about $75,000. Canyon Coffee Creations, with a single stand in Graham, got $17,000.

On the other side of the industry are roasters, who sell wholesale coffee to restaurants and grocery stores. While the former channel dried up in 2020, the latter grew for independent shops like Bluebeard Coffee, whose cafe on Tacoma’s Sixth Avenue has remained closed to indoor seating since last March. With a modest $56,700 PPP loan, Bluebeard managed to not lay off any of its 10 staffers, though one employee left of his own volition, said owner Kevin McGlocklin.

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Acknowledging the inequities inherent to the PPP distribution, he wasn’t surprised that some businesses took advantage of it.

“When you do things as quick and kind of unspecific in order to distribute funds as fast as you can, you see that people are gonna game it,” McGlocklin told The News Tribune in February.

“It doesn’t irk me specifically,” he said. “Across industry and sectors there will be people who took advantage of this who didn’t need the funds as much. In America it’s just kind of one of a million things to be infuriated by.”

As the program unfurled, banks big and small scrambled to comprehend evolving SBA rules.

More than half of Bigfoot’s 33 loans were processed through Washington Trust Bank by April 7, just two days after the PPP launched nationwide. Umpqua Bank, based in Portland, Oregon, managed another 10 loans, approved April 9-14.

Each of the Umpqua loans listed a number of jobs reported, totaling 167. Kurt Heath, vice president of communications, said the bank “encouraged businesses to be as thorough with documentation as possible with an eye towards eventual forgiveness,” noting the rapidly evolving rules of the program and of forgiveness in those early weeks.

As of March, Umpqua had worked with 17,000 businesses on PPP loans worth more than $2 billion. They averaged $125,000. The bank processed about 12,000 of those loans in a single month.

Washington Trust processed 22 of Bigfoot’s loans, reporting 365 total jobs.

Kevin Blair, president of the bank’s Western Washington region, could not speak directly to Bigfoot, or any particular client, but he said 75 percent of the bank’s loans benefited borrowers with 20 or fewer employees, with a median amount of $75,500.

That figure makes Bigfoot’s loans appear average on an individual level.

As a lender, the bank’s role “is to facilitate the application process for our customers while acting as an intermediary between them and the SBA,” explained Blair, evaluating “all options available” to each business.

The Trimark arm of Jiwani’s business landed another 30 loans, with 11 hotels and two gas station plazas taking advantage of a “second draw” loan in January and February, when the country’s rebound from the pandemic still seemed murky, especially for the travel industry.

Unlike the 2020 iterations, businesses applying for another round had to prove at least a 25 percent drop in revenue between the same quarter of 2020 and 2019. Accommodations and food service were also eligible for 3.5 times monthly payroll up to $2 million, rather than 2.5 times for businesses in other industries.

An eligible business should have no more than 300 employees, compared to 500 in the original CARES Act language.

On the hospitality and travel side, Trimark received $5.26 million, with an average loan size around $175,300. Umpqua processed seven of those loans and Washington Trust the remaining 23. The total number of jobs: 374.

Those figures include a loan under the names Trimark Property Group and Trimark Property Management — again, separate LLCs that secured separate loans. All of the 2020 funds were processed in April.

PPP loans are calculated “primarily based on total wages paid to all employees” regardless of part-time versus full-time status, said Heath. “From our experience, those employers that typically hire mostly part-time employees have been smaller in size and are eligible for SBA’s streamlined forgiveness process for loans $150,000 and less.”

According to two former employees, most of Bigfoot Java’s staff is part-time, working two to five 6-hour shifts a week, about 30 hours per week, at minimum wage plus tips. The overnight shift starts at 10 p.m., the morning shift at 4 a.m.

Previous to the pandemic, most shifts had two employees. Around April 2020, stands added a third person and in some cases a fourth, employees said. That way, they were told, both drive-thru windows would have a dedicated cashier while the other person made drinks.

Turnover happens often, the employees said. They are both in their early 20s, as are many of their peers.

Bigfoot received each of its loans early, when the funds had to be used within eight weeks to be forgiven. Congress later amended the CARES Act to extend that forgiveness period to 24 weeks.

As of April 18, the SBA has doled out more than 14.5 million loans totaling more than $1 trillion. Just shy of a third have been approved this year. By the agency’s calculations, three-quarters of the 2021 loans are “small,” or under $50,000.

None of the Bigfoot or Trimark loans fit that description.

thenewstribune.com