Publicly traded firms get $365M in small-business loans
(AP) — Companies with thousands of employees, past penalties from government investigations and risks of financial failure even before the coronavirus walloped the economy were among those receiving millions of dollars from a relief fund that Congress created to help small businesses through the crisis, an Associated Press investigation found.
The Paycheck Protection Program was supposed to infuse small businesses, which typically have less access to quick cash and credit, with $349 billion in emergency loans that could help keep workers on the job and bills paid on time.
But at least 94 companies that disclosed receiving aid were publicly traded, the AP found, and some had market values well over $100 million. And about 25% of the companies had warned investors months ago — while the economy was humming along — that their ability to remain viable was in question.
By combing through thousands of regulatory filings submitted through Monday, the AP identified the 94 companies, or their subsidiaries, as recipients of a combined $365 million in low-interest, taxpayer-backed loans.
Nine of the loans were for the maximum $10 million possible, including one to a California software company that settled a Securities and Exchange Commission investigation late last year into accounting errors that overstated its revenue.
The firms getting maximum loans are likely just a tip of the iceberg: Statistics released last week by the U.S. Small Business Administration showed that 4,400 of the approved loans exceeded $5 million. Overall, the size of the typical loan nationally was $206,000, according to the statistics. The SBA will forgive the loans if companies meet certain benchmarks, such as keeping employees on payroll for eight weeks.
The list of recipients identified by the AP is a fraction of the 1.6 million loans that lenders approved before the program was depleted last week, but it is the most complete public accounting to date. Neither the Trump administration nor the lending industry has disclosed a list of Paycheck Protection Program beneficiaries.
On Tuesday, the White House referred questions to the SBA and Treasury Department.
In an email, an SBA representative did not respond directly to AP’s findings. Instead, the email listed bullet points including that “loans cited by recent media reports going to large companies comprise less than 10% of the loans made.”
Treasury Secretary Steven Mnuchin addressed the issue at Tuesday evening’s White House briefing, saying, “The intent of this money was not for big public companies that had access to capital.”
The department has said in written materials that that 74% of the loans were for less than $150,000, demonstrating “the accessibility of this program to even the smallest of small businesses.”
The AP analysis comes as lawmakers from both political parties reached an additional relief package that in large part would replenish the Paycheck Protection Program with more than $300 billion. The Senate approved the deal Tuesday and the House was scheduled to vote Thursday.
In the wrangling ahead of Tuesday’s vote, several lawmakers expressed urgent need to get more money to Main Street.
“I am troubled by reports of publicly traded companies with access to capital & bank relationships receiving money quickly while many ma & pa shops can’t even get a call back or $1,” Sen. Martha McSally, R-Ariz., tweeted. “The next round of funds must be focused on small businesses, with better oversight & transparency.”
Democratic House members implored that the new package “equitably prioritize small, minority, veteran, and women-owned businesses” in the future.