After public outrage stemmed from the revelation that massive companies got funds meant for real small businesses, the Treasury Department has now said that publicly traded must return the money. The Payment Protection Program (PPP) provides taxpayer-backed low-interest loans to small businesses. Keep reading to learn more.
Related: ENTIRE List of Public Companies That Took BIGGEST Loans Meant For Actual Small Businesses
Public Companies Must Now Repay PPP Loans Meant For Real Small Businesses
The Treasury Department is giving publicly traded companies until May 7 to pay the loan in full in order to stay in good standing according to a new guidance published Thursday.
The department said it was “unlikely that a public company with substantial market value and access to capital markets” could prove that a federal loan was necessary for it to stay afloat.
Large companies have been publicly scrutinized for applying for and receiving PPP loans as the fund ran out of money in less than two weeks.
Millions of small companies, which the money was meant to help, were unable to get a loan. Only about 4% of applications the Small Business Administration received were processed before money ran out less than two week later.
$349 BILLION was set aside for small businesses in the Payment Protection Program. Over 4,400 of the loans made were for $5 million or less–far more than what the typical mom and pop needs to survive for 2.5 months.
Another $310 billion was recently approved for the PPP loan fund. Small businesses should apply through their bank or an approved lender.
U.S. Treasury Secretary Steven Mnuchin said on Tuesday that “there are severe consequences for people who don’t attest properly to this certification. And again, we want to make sure this money is available to small businesses that need it, people who have invested their entire life savings.”
Massive restaurants and hotels were able to get the loans by taking advantage of a loophole in the program that lets them get loans even if they employ more than 500 people by only counting their workforce by location. The exception was added into the bill at the last minute and pushed by industry lobbyists and associations.
Even though publicly traded companies must now repay loans meant for small businesses, privately-held businesses like Fogo de Chao were also able to receive PPP loans. No official word yet whether they will have to repay the taxpayer-backed low-interest loan meant for actual small businesses.
FOGO DE CHAO GOT $20 MILLION PPP LOAN MEANT FOR REAL SMALL BUSINESSES AND CEO DOESN’T GIVE A FLIP
CRAZIEST TIMES BIG COMPANIES GOT PPP LOANS MEANT FOR REAL SMALL BUSINESSES
| Company & Loan Amount | WHAT METROPLEX SOCIAL DISCOVERED |
|---|---|
| Ashford Inc., Ashford Hospitality Trust, Braemar Hotels & Resorts $59 million (so far) has applied for $126 million | *14,000 employees laid off, furloughed, doesn’t plan on hiring them back for months *95% of workforce laid off or furloughed *Subsidiaries manage over 130 hotels *Has applied for $126 million in PPP loans *Believes they shouldn’t have to give any of PPP back *At least $4 billion in debt, stopped making payments, according to the Wall Street Journal *$76 million in cash, doesn’t want to spend it *Market cap $17 million *Monty Bennett paid himself millions of dollars in preferred stock dividends during the economic shut down *Bennett took a whopping 15% pay cut *AHT and BHR paid first quarter 2020 preferred stock dividends |
| AutoNation New, used auto retailer with 360 retail locations $80 million | *Fortune 500 company *$21 BILLION in revenue *Market cap $3 billion *7,000 employees |
| WaveLife Sciences $7.2 million | *Parent company is Singapore-based *Reported net losses of $102 million, $147 million, $194 million over the last 3 fiscal years |
| Potbelly Restaurant chain $10 million | *Annual sales $410 million last year *Promoted Steven W. Cirulus to roles of CFO and CSO, salary of $425,000 *Temporarily reducing $425,000 salary by 25% *Awarded him a $100,000 sign-on bonus *Eligible for year-end bonus worth up to 60% base |
| Legacy Bedford, TX based mobile home builder $6.5 million | *Recently increased borrowing capacity from $45 million to $70 million on a credit line from Capital One *Employs 800 people *Qualified due to a SBA stipulation that lets mobile home manufacturers have 1,250 workers |
| ZAGG Mobile phone screen protectors $9.4 million | *Employed 628 people *149 worked abroad |
| Lindblad Expeditions Cruises, travel expeditions $6.6 million | *650 workers *Has not needed to layoff, furlough or reduce salaries *Branding deal with National Geographic *$137 million in cash |
| Quantum Corp. $10 million | *800 employees *Paid in Dec 2019 a $1 million fine for overstating revenue |
| Marrone Bio Bio-pesticides $1.7 million | *50 employees *COO accused by SEC of over-inflating financial results to make it appear they doubled revenue during its first year as a publicly company *Fined $1.8 million in 2016 as a result *Took on $40 million in debt and has been trying to dig itself out of a hole for years |
| Cinedigm Corp. Leading independent film distributor $2.1 million | *Bison Capital, a Hong Kong-based investment firm, has owned majority of shares since 2017 *NASDAQ warned company in 2019 of getting delisted due to poor performance *NASDAQ notified company March 2020 of being delisted due to poor performance *April 2020 finalized a share transfer for significant equity stake in a China-based cinema company, promissory note $10 million *April 2020 finalized deal for exclusive distribution rights for the Bob Ross channel |
| Enservco $1.9 million | *95 employees *March annual report admits to not generating “adequate revenue to fund our current operations…substantial doubt about our ability to continue as a going concern” *Significant net operating losses in 2018, 2019 |
| LiveXLive (formerly Spotify) $2.1 million | *Same day they received PPP loan funds, they renewed the CFO’s employment term for 2 years at $325,000 for 2020; $375,000 for 2021 *Also gave CFO a sign-on bonus of $100,000 |
| Fogo de Chao (PRIVATELY-held) $20 million | *Two subsidiaries applied and received $10 million each by taking advantage of loophole in the CARES Act *About 40 locations *Last known revenue $314.4 million in 2017 *CEO Barry McGowan defended the decision to apply for small business PPP loans by saying, “The scale of our business doesn’t matter.” |
Public Companies Must Now Repay PPP Loans Meant For Real Small Businesses By May 7
After public outrage stemmed from the revelation that massive companies got funds meant for real small businesses, the Treasury Department has now said that publicly traded must return the money. The Payment Protection Program (PPP) provides taxpayer-backed low-interest loans to small businesses.
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