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The Treasury Department says Paycheck Protection Program loans are not meant for “a public company with substantial market value and access to capital markets.”
It has given big borrowers a May 7 deadline to give back the forgivable loans, which in large part were intended for small businesses hurt by the coronavirus crisis.
So how are the returns going?
At least 27 public companies have returned PPP loans worth about $251 million as of Friday afternoon.
That likely amounts to less than 10% of the publicly traded companies that borrowed through the PPP, as analytics firm FactSquared has estimated that about 300 public companies in total received $1.1 billion in loans.
FactSquared has 25 public companies giving back $167.5 million in loans as of Friday, but its tally — shown in the graphic below, with Fiesta Restaurant Group Inc. FRGI, -10.37% listed twice — doesn’t include giant car seller AutoNation Inc. AN, -4.18% , which said it was returning $77 million in PPP loans, and metalworking company DMC Global Inc. BOOM, -4.30% , which said it had paid back a $6.7 million PPP loan.
These publicly traded companies have returned Paycheck Protection Program loans.
FactSquared
Among the companies shown in the graphic that have made returns are restaurant operators Shake Shack Inc. SHAK, -4.61% , Ruth’s Hospitality Group Inc. RUTH, -11.63% and Potbelly Corp. PBPB, -9.13% .
Many of the publicly traded companies that received PPP loans rank as micro- or small-cap stocks, so they don’t necessarily fit the bill when it comes to the Treasury Department’s targeting of borrowers with “substantial market value and access to capital markets.”
For example, cruise operator Lindblad Expeditions Holdings Inc. LIND, -3.44% , which has a market cap of about $300 million, said it doesn’t have ready access to capital and plans to keep its $6.6 million loan, according to a Wall Street Journal report.
The public companies that haven’t returned PPP loans also include three hotel companies tied to Dallas businessman Monty Bennett that have applied for $126 million in total — Ashford Inc. AINC, -19.67% , Ashford Hospitality Trust Inc. AHT, -9.65% and Braemar Hotels & Resorts Inc. BHR, -11.50% , which recently were showing a combined market cap that had fallen below $300 million.
“We plan to keep all funds received under the PPP, which were provided as a result of the application process and other specific requirements established for our industry by Congress,” the three hotel companies said in a four-page statement.
“Although our companies are publicly listed, they do not have access to this volume of emergency funding from the capital markets that we believe we need during this crisis due to their relatively small market capitalizations,” the statement also said.
Read more:Here’s why hotel and restaurant chains got the coronavirus aid for small businesses
A backlash over large companies obtaining PPP loans while many small businesses experienced delays also has prompted returns by privately held companies, including the Los Angeles Lakers, restaurant chain Sweetgreen and media outlet Axios. In addition, Treasury Secretary Steven Mnuchin on Friday criticized some private K-12 schools with significant endowments for borrowing through the program.
The Justice Department has opened an investigation into companies that applied for PPP loans, and experts say borrowers that provided misleading information could face jail sentences.
The PPP quickly ran through the $350 billion that it received initially in late March through the $2.2 trillion Cares Act, and then in late April got an additional $320 billion as President Donald Trump signed into law the $484 billion Paycheck Protection Program and Health Care Enhancement Act.
Related:Here are the public companies that got coronavirus aid meant for small businesses
And see:Pelosi suggests banks making PPP loans shouldn’t get paid more for serving bigger companies
“So far, PPP hasn’t gone smoothly,” said Capital Alpha Partners analyst Ian Katz in a note.
“It does indeed seem unfair that a company large enough to trade on a stock exchange, or an individual with enough money to have a designated concierge at a major bank, should be able to cut in line in front of mom-and-pops,” Katz also said. “We get that. But what’s not getting adequate discussion is the economic objective, which is getting people back to work.”
Now read:Emergency loans for small businesses ‘flowed to areas less hard hit’ by coronavirus, study finds
This is an updated version of a story that first published on April 29, 2020.
