It's been widely reported that some very big businesses, like Ruth's Chris Steak House ($20 million) and Shake Shack ($10M) got "small business" loans
from the Paycheck Protection Program. Potbelly sandwich chain, national chain Taco Cabana, video storage company Quantum and coal company Hallador Energy, all snatched up $10 million each.
That should come as no surprise, as the emergency loan
program was rigged by the GOP to favor big restaurant and hotel chains without congressional oversight. “Big Wall Street-backed restaurant chains that pay their executives
super-sized bonuses should not be the first served up SBA loans by this
administration," said Derek Martin, a spokesperson for the watchdog group Accountable.US. "What a slap in the face to the untold thousands
of legitimate small businesses that will not survive this crisis, many
because they couldn’t get the help they were promised from the president
soon enough, if at all.”
An Associated Press investigation
into the recipients of this first round of funding has revealed that a
lot more very big businesses have exploited the program. At least 75 publicly traded companies, "with thousands
of employees, past penalties from government investigations and pre-virus risks of
financial failure were
among those receiving millions of dollars" from the loan program. Some
of these companies had market values "well over $100 million." These 75
companies got a combined $300 million in the taxpayer-funded, low-interest and potentially forgivable loans.
One of the companies that got $10 million is a
software company in California that had been investigated by the
Securities and Exchange Commission for accounting errors overstating its
revenue; it settled late last year with the SEC. Looking at the
statistics released by the SBA last week, AP found that 4,400 of the
loans exceeded $5 million. No wonder the fund, which again was supposed
to rescue small businesses, was depleted so quickly.
Some of the large companies that surfaced in the AP review had
foreign owners, had been de-listed from the stock exchange, or
threatened with de-listing because of poor stock performance even before
the coronavirus crisis. Some have had strings of financial losses for years. One of them,
Wave Life Sciences USA Inc., a Boston-area biotechnology company in
pharmaceutical development, got $7.2 million. Its parent company is
based in Singapore and disclosed in its annual report that it had
suffered "net losses of $102 million, $147 million and $194 million
during the last three fiscal years." The company has also admitted, "We
currently have no products on the market and expect that it may be many
years, if ever, before we have a product candidate ready for
commercialization."
The PPP fund-- meant to keep small businesses and their employees afloat
during the crisis-- ended up being a bailout for a lot of companies that
were failing even before the crisis. But it gets even worse.
75% of loan requests from Nebraska (a GOP-led state) were approved; 71% of
loans from North Dakota (another red state) were approved as well. Who knew that North Dakota was a powerhouse of the nation's small business? While California and New York saw less than 25% of their loans approved. Washington D.C. only got 19% of their loans approved. Sounds like the fix was in for Republican vs. Democratic states, don't you think?
On top of that, it came to light that Texas has been approved for $1 billion more
in loans than California (and 30,000 more loans) despite California's economy being $1 trillion larger and being much harder hit
by COVID-19 (1,200 deaths in CA vs. 500 for TX).
Democrats are trying to make sure
that the next round of funding for the PPP, will have $125 billion guaranteed to go to small lenders and thus
to actual small businesses.
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