WASHINGTON–While the federal government isn’t disclosing which companies are receiving aid as part of the Paycheck Protection Program (PPP), one early analysis has found numerous recipients have included companies with sufficient cash to be buying other companies at the same time, companies that have been subject to federal investigations and fines, and companies that had significant access to other forms of financing, even though they weren’t supposed to. Among those receiving PPP funds: the Los Angeles Lakers of the NBA.
That’s according to disclosures by companies that have acknowledged receiving PPP loans in the initial $349 billion of funding, according to the New York Times, which published the report at the same time another $310 billion in funding for the PPP has become available.
While called “loans,” the money is really a grant, as terms of the agreement forgive the loan if a company uses 75% of the funds for payroll and it maintains its headcount.
As CUToday.info has reported, several companies have reported returning their PPP funds once it was made public, including Shake Shack, Ruth’s Chris and Auto Nation.
Companies Receiving Funds
The New York Times review found:
- One company in Georgia paid $6.5 million to resolve a Justice Department investigation — and, two weeks later, received a $10 PPP loan. In all, the Times said it found at least seven companies that received a total of $45 million in loans under the federal government’s program have recently had serious scrapes with the federal government.
- AutoWeb disclosed it had paid its chief executive $1.7 million in 2019 — a week after it received $1.4-million from the program.
- Intellinetics, a software company in Ohio, got $838,700 from the government program — and then agreed the following week to spend at least $300,000 to purchase a rival firm.
- The NBA's Los Angeles Lakers received $4.6 million, which the team has since returned.
Large Payouts
“The loan program was meant for companies that could no longer finance themselves through traditional means, like raising money in the markets or borrowing from banks under existing credit lines,” reported the Times. “…Dozens of large but lower-profile companies with financial or legal problems have also received large payouts under the program, according to an analysis of the more than 200 publicly traded companies that have disclosed receiving a total of more than $750 million in bailout loans. Another dozen or so collected money even though they have recently reported being able to raise large sums through private means. Several others have recently showered top executives with seven-figure pay packages.”
It's ‘Outrageous’
“It’s outrageous,” Amanda Ballantyne, the executive director of Main Street Alliance, an advocacy group for small businesses, told the New York Times. Ballantyne further told the Times there have been countless small business owners “who have laid off all their staff, are trying to file for unemployment and will go bankrupt because of the problems with the way this Paycheck Protection Program was designed.”
The New York Times said it identified roughly a dozen publicly traded companies that had recently boasted about their access to ample capital — and then applied for and received millions of dollars in the federal loans.
As the Times noted and CUToday.info has previously reported, PPP applicants for loans do not need to provide evidence that they have been harmed by the pandemic. They simply need to certify that “current economic uncertainty makes this loan request necessary” to support their operations.
“Executives at some companies said applying for the loans made clear business sense,” reported the Times. “The loans are essentially free money…In some cases, executives said, their bankers encouraged them to apply for the loans.