70+ Security Industry Companies Take $50 Million PPP Funding

JH
John Honovich
•Published Jul 15, 2020 14:01 PM
PUBLIC - This article does not require an IPVM subscription. Feel free to share.

70+ security industry companies have taken more than $40 million in PPP funds, IPVM has confirmed from US government records.

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Inside this report, we list each company, the amounts obtained, the jobs saved, analyzing the impact on the industry, and sharing responses from many of the companies who obtained the funding.

Amounts Publicly Released

The US SBA and Treasury released Coronavirus bailout records, on July 6 providing "loan amount ranges". The ProPublica Coronavirus Bailouts search engine posted these entries online, and IPVM reviewed 50+ companies in the security industry that appear to have received loans, over $150,000.

PPP Loan Background

SBA.gov describes employee retention as the purpose of the relief program:

An SBA loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis.

SBA will forgive loans if all employee retention criteria are met.

Overall in the US, according to the SBA and Treasury, "4.9 million PPP loans have been made" and "the average loan size is approximately $100,000".

Criteria For Receiving Loan

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Definitions and criteria per the SBA Borrower Application Form for "small business" eligibility:

  • "Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant"
  • "The Applicant (1) is an independent contractor, eligible self-employed individual, or sole proprietor or (2) employs no more than the greater of 500 or employees or, if applicable, the size standard in number of employees established by the SBA"
  • "Disclosure of Information – Requests for information about another party may be denied unless SBA has the written permission of the individual to release the information to the requestor or unless the information is subject to disclosure under the Freedom of Information Act"

Top 10 Biggest Loans

  1. Tech Systems: $5-10 million, 381 jobs retained
  2. Brivo: $2-5 million, 203 jobs retained (see Drako's Companies (Brivo, Eagle Eye) Take $4+ Million in PPP Funds)
  3. Costar Technologies: $2-5 million, not listed
  4. Digital Monitoring Products: $2-5 million, not listed
  5. Doyle Security Services: $2-5 million, 437 jobs retained
  6. Doyle Security Systems: $2-5 million, 167 jobs retained
  7. North American Video Corporation: $2-5 million, 163 jobs retained
  8. TEquipment: $2-5 million, 127 jobs retained
  9. Videotronix: $2-5 million, 201 jobs retained
  10. Napco Security Technologies: $1-2 million, 251 jobs retained

All Companies Found

Companies Explain Rationale For Taking PPP

The following companies responded to IPVM about why they took the PPP:

Deep Sentinel, Founder Dave Selinger explained:

The number we provided to the SBA in our PPP application was 45 jobs were retained because of the loan. The data you are looking at contains an error. We are working with our bank and the SBA to correct this error.

I'm not sure if you followed all of the challenges the SBA ran into as they rushed to implement their system but there were a number of system crashes over the past few months and I am concerned that this data error may be because of this.

The SBA processing system (called "E-Tran") was designed to handle about 1/10 of the load of the PPP over the course of a whole year (!!!) --- and the PPP crammed 10x the load into an 8-week period. They also changed the regulations about 5 times over the course of the program which caused a lot of confusion and problems for the banks filing the apps with the SBA. Because much (most?) of this system is manual, it is also possible that there was a data entry problem transcribing the information from the application we submitted--which could have been further exacerbated by the changing regulations. We are looking into this as well.

Defendry, VP Skyler Stewart explained:

Defendry received $185K and it helped us retain our core team. We have also received an undisclosed amount of investment from both new and old investors. We fully expect to emerge from the lockdown in really great shape.

Digital Monitoring Products, VP Mark Hillenburg explained:

ALL DMP JOBS were retained, and I think we have actually hired additional people over the course of the pandemic. Of course we were early on deemed essential through the CISA definition. We did send about 25% of our workforce to work from home…and then we did all the recommended CDC things to distance our workforce on the manufacturing lines, including adding plexiglass dividers, where line distancing could not be achieved, etc…

We have been fortunate that our part of the country was not impacted widely with cases.

Eagle Eye Networks, Owner Dean Drako explained:

First and foremost, fast-growing companies can use a lot of cash; we heavily invest in technology for growth – we are not running the “Drako” companies as cash cows.

Second, when COVID-19 first hit there was a LOT of uncertainty across all the businesses. Regardless of our success at Eagle Eye Networks and Brivo, we had no idea how severe it was going to be or the overall impact on the security industry. We were in completely new territory and highly concerned.

Taking the loans enabled us to reassure our employees during a trying time. It was good we took the PPP funds because we initially saw severe slowdowns and the prudent step would have been to reduce staff. As you probably remember the economy briefly came to nearly a complete stop. Panic was in the air. With the loans we did not need to do reduce the staff.

Things have improved since then, however with the recent Coronavirus spike across the country – and reopening plans reversed -- the future is again unclear. Hopefully we continue to continue back to normal.

As to the appropriateness of taking the PPP loans, it was fiscally responsible to our shareholders and employees for us to apply. I am not the only shareholder in the "Drako" companies. Our employees and others are significant shareholders in all of the “Drako” companies (I am a strong believer in employees participating in the success of the company).

If I were to personally fund (or provide convertible loans) to the companies, it would cause dilution to the shareholders, including the employee shareholders, which is generally something I try to avoid. The PPP allowed us to avoid this.

EasternCCTV (ENS), VP Rock Lei explained:

1. We don't want to disclose the specific amount received;

2. We are keeping all of our employees, and hiring more new employees too;

3. COVID-19 pandemic gives us a HARD time with our business. Our sales decreased a lot in the beginning of the pandemic.

IPVM explained:

IPVM Received a PPP Loan in the amount of $237,500. On the downside, we did have to cancel the conference, which we lost ~$200,000 on and in March, when we applied, we had a significant number of members cancelling their subscriptions, as layoffs and furloughs swept the industry.

Things have improved since, as we launched our Online Show series and lead the world in testing and researching fever cameras.

Kirschenbaum & Kirschenbaum, Ken Kirschenbaum explained:

24 FTE jobs were retained. Has any business or person not been affected by the coronavirus epidemic? Of course my business has been affected, negatively affected, in many ways

Kirschenbaum also shared his interpretation of the "current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant," contending that every business operation was affected:

This was stated criteria - with no explanation, when the PPP loan was offered. Clearly everyone was affected by economic uncertainty; the country was on lock-down. No one could predict how the horror story was going to play out, and we still don't know how it ends. Every business operation was affected by the current economic conditions, from employee issues, customer issues and general uncertainty where things were headed. The uncertainty was not limited to the time of the loan application or the 8 weeks that followed; it's uncertainty in the future, which hasn't yet arrived.

New York Security Solutions, CEO Greg Keeling explained:

Our team retained consisted off Operations, Engineers, Estimators, Systems Administrators, Project Managers and Field Technicians.

Honestly we faired quite well in comparison to other integrators, we were very much lucky in that our clients did not cancel projects mainly due to the nature of their funding and market served. We did shut down for 30 days from March to April and yes it was quite difficult and stressful but I am not telling you anything you didn’t already know. Fortunately we have always been a very efficient and lean operation this is what helped us get through these difficult times.

Qumulex, Co-founder Tom Buckley explained:

Qumulex applied, and was approved for, a PPP Loan of $206K.

All proceeds from the PPP loan are going towards retaining our development team. The climate in the Spring regarding our ability to raise cash to continue our development (which funds twenty well-paying positions), as well as the forecast for integrators and end users to invest in new technology solutions was, and continues to be, highly uncertain. Since we met the qualifications for the program, we decided it was prudent to participate, and we have used all of the loan proceeds for their intended purpose of employee retention.

Razberi Technologies, Founder Tom Galvin explained:

Thank you for reaching out to us. We don’t have any additional comments to add.

Vintra, CEO Brent Boekestein explained:

The PPP money helped us to retain jobs in the US (as you are aware, PPP funds could not be used for non-US employees such as those in our Barcelona office). We applied for a relatively small amount, as we had some software renewals and anticipated deals in our pipeline that we expected mid-year, but wanted to ensure we did had sufficient time for those deals to come in given the dislocation in the market. Fortunately, those closed as expected, and we’re now focused on helping our customers re-open safely and continuing to add features to our suite of products.

We reached out to 40+ companies. If or when others respond, we will add to the list.

Other Companies

If you are interested in this topic, we encourage you to use the ProPublica Coronavirus Bailouts search engine. Keep in mind, the government is only disclosing companies who took more than $150,000 so smaller companies or smaller requests are unlikely to be included. Also, the listing is only under the company's legal name which may make it harder to find certain companies whose brand differs from their legal name.

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