Forget the mom-and-pop shops, big business rules.
Huge, publicly traded companies have already sucked up hundreds of millions of dollars from the emergency funding Paycheck Protection Program (PPP) set aside for small businesses in the $2.2 trillion package passed by Congress last month.
The PPP started out with nearly $350 billion and was intended to help small businesses survive mandatory shutdowns or business slowdowns during the coronavirus crisis. But at least 75 companies — some of them with market values topping $100 million — have requested and received cash from the fund.
In fact, the federal government has paid out more than $243 million of the total $349 billion to publicly traded companies, new research published by Morgan Stanley shows.
“The research shows that several of the companies that have received aid have market values well in excess of $100 million, including DMC Global ($405 million), Wave Life Sciences ($286 million) and Fiesta Restaurant Group ($189 million). Fiesta, which employs more than 10,000 people, according to its last reported annual number, received a PPP loan of $10 million, Morgan Stanley’s data showed,” CNBC reported.
“At least 75 companies that have received the aid were publicly traded and received a combined $300 million in low-interest, taxpayer-backed loans, according to a separate report published by The Associated Press.”
The AP put the number even higher. “At least 94 companies that disclosed receiving aid since the program opened April 3 were publicly traded, the AP found, some with 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.”
“I think you’ve seen some pretty shameful acts by some large companies to take advantage of the system,” Howard Schultz, former Starbucks chairman and CEO, told CNBC. Instead, he said the government should act “as a backstop for the banks to give every small business and every independent restaurant a bridge to the vaccine. And that is the money and the resources to make it through.”
Massive restaurant chains have also cashed in. While the PPP was designed for companies with fewer than 500 employees, restaurants and hotels were exempt from the limit if they had fewer than 500 employees per location.
The owners of large restaurants chains like Potbelly, Ruth’s Chris Steak House and Taco Cabana qualified for the maximum $10 million in loans. Shake Shack, which revealed on Friday that it received a $10 million loan, faced massive backlash and by Sunday announced that it would return the money.
“When I hear that these big chains are getting millions of dollars, it’s like a slap in our face,” said Ram Mehta, owner of In-Fretta Pizza outside Dallas, in an interview with the Daily Mail. “It’s not fair.”
Funding for the PPP ran out last week, but Congress on Tuesday finally reached a deal to add $310 billion in small-business loans.
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Author: Joseph Curl