Small Businesses Get Small Business Loans Through PPP: NPR
Shannon Stapleton / Reuters
Updated at 1:36 p.m. ET
Restaurant chains, construction companies and mobile home manufacturers are among more than one million businesses approved for loans to date under the $ 349 billion paycheck protection program. government.
The program is primarily intended to benefit small businesses – defined as those with fewer than 500 employees – affected by the coronavirus pandemic. However, some large publicly traded companies have also qualified for loans.
These include catering company Potbelly, video storage company Quantum and coal company Hallador Energy, all of which received the maximum of $ 10 million. Some companies reported higher amounts because subsidiaries also requested loans. The vast majority of loans issued were considerably smaller, averaging around $ 250,000, according to KBW Research.
What is unique about the program is that the loans are canceled if the companies retain or rehire employees. So, in effect, many of these companies can get millions of dollars in free money.
Passed by Congress, the Paycheck Protection Program, or PPP as it is called, was put in place quickly with the aim of stemming the huge wave of layoffs sweeping the economy. Safeguarding jobs was therefore a priority. But the loan eligibility criteria have been kept unusually loose.
As a result, the money allocated for the program was quickly depleted and Congress is now in talks to extend the program.
Many small businesses have complained of being left behind.
“Whether it’s mismanagement or malpractice, the Trump administration’s inability to properly allocate funds means thousands of small businesses will not receive the funding they need to support their employees.” said Kyle Herrig, chairman of Accountable.US, a watchdog group. “Meanwhile, a bunch of publicly traded companies worth hundreds of millions have been given a cash injection and are sitting up well.”
Anger reached a crescendo last week after reports that the $ 1.6 billion restaurant chain Shake Shack Received $ 10 Million Loan. The company said over the weekend that it would refund the money.
“Paycheck Protection Grants are supposed to support workers and their families during this economic crisis, not line the pockets of business leaders,” Herrig said.
Other companies that qualify for the loans include Escalade Sports, which describes itself as “a leader in table tennis, residential underground basketball goals and archery arcs.” The company, which has 468 employees and is headquartered in Evansville, Indiana, received a loan of $ 5.6 million.
Legacy Housing, the country’s fourth-largest manufactured home company, received a $ 6.5 million loan, while pharmaceutical company Optinose got $ 4.4 million.
Although restaurant and travel companies are among the hardest hit by the crisis, they have not received the most money. The main borrowers were construction companies (13.1% of loans to date), followed by professional, scientific and technical services (12.7%) and manufacturing (12%).
The fact that construction companies got the most out of it could be due to their closer relationships with banks, who may have decided to prioritize them over other companies, according to KBW Research.