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Portland’s bike industry received $4.7 million in pandemic relief loans

Posted by on December 14th, 2020 at 3:57 pm

Customers line up outside River City Bicycles Outlet on November 7th. RCB Outlet and its sister store, River City Bicycles received $604,392 in loans.
(Photos: Jonathan Maus/BikePortland)

“The loan helped offset all that red ink we generated during the down months and allowed us to survive.”
— Kyle Ranson, Showers Pass

In late March, as the full scope of the Covid-19 pandemic became clear and a shutdown took everyone off the streets, things looked grim for Portland’s beloved bike shops and other bike-related businesses and nonprofits.

Months before the bike boom would kick in and allay our concerns, owners of local bike companies lined up for federal Covid-19 relief loans to help make payroll, buy equipment to adapt to the new ways of doing business, and hopefully keep their doors open. We now have a clearer picture of who received what when it comes to the Small Business Associations two biggest bailout sources: the Paycheck Protection Program and Economic Injury Disaster Loans.

After demands for transparency from media and other groups, the SBA just released a new search tool that has the loan amounts for 5.16 million recipients of the nearly $523 billion that was handed out. I searched for local bike companies and came up with a list of 42 Portland-based businesses that borrowed a total of $4,801,323 (if you know of any I missed, please let me know so the list is as complete as possible).

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I split the recipients into four categories: bike shop, nonprofit, products/services and manufacturing/builder. Below are the total loans and amounts for each category:

  • Bike shop: 24 loans – $2,687,535
  • Manufacturing/builder: 5 loans – $993,686
  • Nonprofit: 5 loans – $463,279
  • Products/Services: 8 loans – $709,723

The sizes and terms of the loans vary. Data in this story includes PPP and EIDL funds. If companies are able to prove jobs were saved, they won’t have to pay back the loans. For loans that are not forgivable, they come with low interest rates and a 30-year term.

There was a wide range of loans to bike shops: Seven loans were for over $100,000; seven were between $20,000 and $62,000; and 10 were below $18,000. Bike Gallery, a chain with six stores in the region and three in Portland, received $714,738. Velotech Inc., an e-commerce company that operates BikeTiresDirect.com, WesternBikeworks.com and other websites received $506,000. On the other end of the spectrum was Metropolis Cycle Repair in north Portland that received just $6,000.

A CNC machine operator at King Cycle Group.

Component maker King Cycle Group (Chris King Precision Components) received $717,900, the largest loan of any local bike company. Their application said the loan supported at least 70 jobs.

Bike-related nonprofits also got into the act. The Community Cycling Center received $271,000, The Street Trust nabbed $134,371 and the Oregon Bicycle Racing Association (OBRA) received $29,703. OBRA was hit particularly hard by the virus since the racing season had only a few events. (Note: I put the nonprofit Community Cycling Center into the bike shop category because they run a retail store as well.)

“Everyone has still had to make sacrifices, but it is a whole lot more bearable because of the loan.”
— Jonnie Ling, Community Cycling Center

Joe Bike owner Joe Doebele said his $50,500 loan helped him pay for personal protective equipment (PPE), an air purifier, and other gear needed to operate outdoors. “Since we stopped allowing customers in the store in March, it helped us restructure our service and sales floors both to better space out our employees and to better serve customers outside,” he shared in an email today. “It had both short- and longer-term benefits, and those benefits are ongoing,” Doebele added.

Showers Pass CEO Kyle Ranson said he used every penny of their $342,300 loan to pay staff. “When our revenue evaporated we made the decision to not lay anybody off, hoping things would pick up again in the fourth quarter,” he shared in an interview today. “The PPP loan helped offset all that red ink we generated during the down months and allowed us to survive.”

With all their summer camps called off and a big drop in retail shop revenue, Community Cycling Center Interim Executive Director Jonnie Ling told me this afternoon their PPP loan, “Felt like our last hope to prevent significant layoffs.” The CCC pivoted to food delivery in April and has been able to keep all staff on board. “Everyone has still had to make sacrifices,” Ling said, “But it is a whole lot more bearable because of the loan.”

OBRA Executive Director Chuck Kenlan said the loan has helped put them in a “strong financial position entering 2021.” While OBRA’s loan has already been forgiven, Ling with the CCC says their forgiveness process is just getting started. “We’re hoping that goes off without a hitch,” Ling shared.

The bike industry in general has had a wild year (to put it mildly). While “bike boom” splashes across headlines and news reports, inventory is still hard to come by. Shops are banking on service and repairs while they wait for complete bike shipments and build up every frame in sight to meet demand. Bicycle Retailer & Industry News reported an increase of 19% in bike imports so far this year compared to 2019.

While it looks like a massive hit to our local bike economy will be avoided thanks in large part to these loans, the impacts of Covid-19 will be felt for a very long time. Ling at the CCC says he hopes the loan program is renewed in 2021. “There is still a lot of uncertainty.”


Here’s the full list:

— Jonathan Maus: (503) 706-8804, @jonathan_maus on Twitter and jonathan@bikeportland.org
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Becky/Golden PliersJonathan Maus (Publisher/Editor)AnnalisaSteve ScarichTony Pereira Recent comment authors
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Becky/Golden Pliers
Guest
Becky/Golden Pliers

Just want to clarify the numbers here….there were PPP loans, the majority of which can be forgiven if used within the guidelines. They otherwise convert to low-interest loans. There were EIDL grants awarded to businesses, and if your business got one of these, the amount is subtracted from the forgivable amount of your PPP loan. In our case, about half of our PPP loan will not be forgiven, and it looks like we’ll pay taxes on the grant. Then there are Economic Injury Disaster Loans, also low-interest loans from the SBA, available in larger amounts. The figure above (at least for Golden Pliers) includes a combined EIDL loan, PPP loan, and EIDL grant. This is a complicated and nuanced subject that appears to be lost on many of the commenters here, and further explanation seems necessary.

joan
Subscriber

This is great information. Thanks so much for reporting on this.

Steve Scarich
Guest
Steve Scarich

Are these loans secured in any way? Because, I can see many of these businesses not being able to ever repay.

Phil
Guest
Phil

PPP loans are forgiven if the businesses used them for the prescribed purposes.

David Hampsten
Guest
David Hampsten

Yup, our tax dollars at work. Sure beats fighting foreign wars.

Steve Scarich
Guest
Steve Scarich

Thanks, but that is not security. It is a promise. So, if a business does not use it for the intended purpose, it looks like there is no ‘security’, unless the government goes after the owner’s assets.

J_R
Guest
J_R

From the US Treasury website:

“For Borrowers Paycheck Protection Program (PPP) borrowers may be eligible for loan forgiveness if the funds were used for eligible payroll costs, payments on business mortgage interest payments, rent, or utilities during either the 8- or 24-week period after disbursement.”

Jon
Guest
Jon

It is my understanding that if the business meets a set of requirements including preserving jobs the loan is forgiven. My employer did not participate in the PPP so I am just going with what I heard from a friend that owns a small business in Portland.

dwk
Guest
dwk

The whole point is they don’t repay. They shut down for the pandemic.
Do you have a problem with that, Steve?

Steve Scarich
Guest
Steve Scarich

I’m not quite sure what your point is, but it seems to be that you don’t think that I care about the fate of small businesses. Not so; I am just interested in ensuring that the money is spent as efficiently as possible (e.g. deserving business who honor their commitments and are headed for success). My touchstone is the reported $2 billion, yes billion, of misspent EDD funds in California, due to fraud by convicts, scammers, and overseas entitiies who hacked the system.

ZBP
Guest
ZBP

Glad to see shops on this list who continuously get their doors crow-barred open, but I also can’t help but think of how much of this cash likely went straight into the pockets of the owners of bigger companies like BG and King while their underlings barely make a living wage.

Pascual Perrin
Guest
Pascual Perrin

I disagree. I bet some of the larger companies pay very good wages as well as have excellent benefits. Here are some of the employee benefits from King
Benefits include, but are not limited to:

100 hours of paid time off (PTO) during your first year of employment
8 Paid Holidays per year
Company sponsored health insurance, vision, short term disability, long term disability, and life insurance
Voluntary dental insurance
Section 125-plan participation eligibility
Onsite employee café serving breakfast and lunch daily at cost pricing
Commuter café credits for using alternative transportation
Employee purchase program for internal CKPC and outdoor/cycling industry products
Bi-annual bike commute challenges to earn up to 40 additional hours of PTO per year

Bennett Shane
Guest
Bennett Shane

They are an outlier.

Hellomo
Guest
Hellomo

King and “very high wages”? I assume you have not worked there.

Chris I
Guest
Chris I

Benefits look good, but the wages are not in line with similar jobs in metal fabrication locally. Go look at the wages being paid by Daimler and Boeing…

Big Agnes
Guest
Big Agnes

You’re comparing bicycle headsets to aircraft machining?

Chris I
Guest
Chris I

I also mentioned Daimler. I suppose a better comparison would be some of the smaller parts suppliers around town.

Former Velotech Employee
Guest
Former Velotech Employee

Velotech. .5M gift. They weren’t slow, and invested zero $ in Covid safety for their facility. Paying most of their essential (warehouse) staff ~ $14/hour with no 401k or paid holidays. Total joke.

Jon
Guest
Jon

I know a few folks on the list above that own bike shops. They are not driving Porches and living large. There is not tons of money in retail bike shops these days. They are competing with internet sales of parts and bicycles worldwide. The Corona virus hit at a time of the year that is very rough for bicycle retailers. Think back to when the CARES Act was being crafted and passed – March of 2020. Unemployment claims were skyrocketing and all the news was gloom and doom. I don’t work in the bike industry but where I worked sales dropped off the cliff and almost everyone was furloughed for at least a month. Sales are very slow in the winter and bike shops have to spend a bunch of money to order inventory for the spring/summer. Most shops are bleeding money that time of year and have a minimum staff since very few people are shopping for bikes in Jan/Feb/Mar. The supply chain just got clobbered because many of the factories in Asia were slowed or shut down by the lockdowns in January/Feb. Loans like these and the promise of these loans allowed many of these companies to keep staff and order the inventory that they might not have based on all the layoffs and slowdowns due to the virus. Without programs like this we could easily be looking at an economic depression not a recession. All of us that pay taxes will eventually have to pay for all the government debt but overall this seems so far like a great way to spend money to stimulate the economy during a disaster. It turned out that bike shops were able to sell almost any bike they could get but that was not something anyone would have predicted in March.

Bennett Shane
Guest
Bennett Shane

lol the owner of Velotech literally owns multiple late model Porches. Not that he made that $ from Velotech, if anything the company is a hobby for him. Oh yea he also owns a huge house on Mt. Tabor. Nice guy, just saying…

Paul Qualey
Guest
Paul Qualey

We at Bonney Lake Bicycle of Sumner have had one of the best years in sales and repairs and would be ashamed to have taken any money from anyone, We have been in business 30 plus years and love the bicycle business.

Phil M
Guest
Phil M

A whole lot of money has been extracted from the feds. Where a lot if it has gone, who knows. Calling this a scamdemic seems appropriate at times.

Aaron
Guest
Aaron

So a bunch of people faked suffering from/dying of covid just so people could scam the federal government out of funds? The same federal government that is led by a president who himself has given voice to such notions and without whose approval none of these funds would be disbursed? Also, the correct conspiracy theory name is “plandemic”.

Matt
Guest
Matt

Keep patting yourselves on the back with that virtue-signaling. I was taught never to look a gift horse in the mouth. And you’ve put yourselves at a competitive disadvantage towards shops that did accept the funds. I’m an employee at a shop whose owner did take out a loan, and I’m glad for it

Jesus H
Guest
Jesus H

I, on the other hand, would be ashamed to post a kneejerk judgments of people whose circumstances I don’t even know while simultaneously virtue signaling that I’m better and more successful than they are. What’s shameful about doing all you can to keep employees at work and off the unemployment line after inventory is depleted? What’s shameful about boosting both their hours and their hourly pay during the most stressful, unpredictable months of their lives? Of helping them pay for health insurance to a greater degree than you could otherwise afford to? Of equipping them with PPE and doing everything possible to make a safe environment for them and the public? If I were you, I’d be ashamed to have passed up an opportunity to help safeguard my employees, my business, and my community against whatever unknown shocks might happen down the road. According to your website, you’re just about out of bikes up there in Washington “until further notice”. So have you laid anybody off yet this fall and winter compared to your summer staffing?

Steve Scarich
Guest
Steve Scarich

So interesting; please share why/how you think that you succeeded, while others appear to have failed? I’m not interested in dissing any business, more in your story.

Chris Anderson
Subscriber

This is Wall Street Journal level reporting minus the spin. Way to go deep. It might be helpful to the readers to have more context e.g. about what percentage of the relief went to the outdoor industry and the bike industry, or to Portland and other similar sized cities.

Bennett Shane
Guest
Bennett Shane

Thanks for making this information available.

ricochet
Guest
ricochet

Stages Cycling’s parent company Foundation Fitness received $2.05 million

JR
Guest
JR

I think it’s important to keep in mind that the CARES Act was an imperfect and blunt tool to address a national economic crises. There will be thousands, if not millions of cases of people or businesses that didn’t need the money or made more temporarily while unemployed, but it helped millions of others who genuinely needed it to keep jobs, pay the mortgage/rent, keep food on the table, etc. We can’t sacrifice the good for an impossible perfect.

RudiV
Guest
RudiV

Talked to a friend who owns a popular commuter centric bike shop this weekend. He says he now has plenty of inventory, but demand has fallen off a cliff again. Like a regular winter but worse. He has a basement full of bikes in boxes. This might be a problem but apparently the terms are such that he’s not worried and can hang on to them until spring.

David Hampsten
Guest
David Hampsten

There’s still high demand out here in NC, and local shops don’t expect to be caught up until the 3rd quarter of 2021 at the earliest, for low to medium quality bike shop bikes. Plenty of high-end equipment of course, but there always has been.

The eBike Store
Guest

Additionally, any shop that had SBA loans automatically received 6 months of free payments on their SBA Loans…

Tony Pereira
Guest
Tony Pereira

The amount reported for Breadwinner is inaccurate. We applied and were approved for a EIDL loan for $80,000, but we decided not to take it. We did take out a $45,000 PPP loan, which we used for payroll and rent, and it kept us in business until things picked back up.