An Associated Press investigation finds at least 75 publicly traded companies, some worth more than $100 million, received $300 million from a relief fund meant to help small businesses through the coronavirus.
AP’s review also found examples of companies that had foreign owners and that were delisted from U.S. stock exchanges, or threatened with removal, because of their poor stock performance before the coronavirus caused a downturn. Other companies have had annual losses for years.
Michael Minnis, who has studied the SBA program as an accounting professor at the University of Chicago Booth School of Business, said he understood the frustrations of smaller businesses that have not received funding when publicly listed companies have. But he said it would be hard to go into the program and change the parameters now.
The owners behind large restaurants chains like Potbelly, Ruth’s Chris Steak House and Taco Cabana were able to qualify and get the maximum $10 million in loans despite employing thousands of workers. Quantum Corp., a data storage company based in San Jose, California, that has a workforce of 800, paid a $1 million penalty last December over allegations that accounting errors resulted in overstated revenues. Quantum received a maximum $10 million loan.
Pam Marrone, the chief executive, said the company “shouldn’t be punished” for what happened with the SEC because it has had clean audits for years now. She described the investigation as a “body blow” that cost it investors and drove its stock price under $1. She said it has had to take on $40 million in debt and is still digging itself out of the financial hole.
In an interview, president and chief executive Phil Deschamps said the company was able to raise enough capital earlier this year that, when paired with the loan, it can survive to early summer — when it expects to have filed for U.S. Food and Drug Administration approval for its device. Without the federal money, he said, the company would have lost scientists and attorneys who help prepare regulatory submissions.
Chief executive Ian Dickinson said in an interview that his company would not have folded without the $1.9 million loan it received. But, he said, he welcomed the money and would’ve had to let go more employees than he already has without it. Enservco’s annual report cited 186 employees; Dickinson said payroll has “reduced significantly” from that mark, without giving specifics.
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