SALT LAKE CITY — Did federal emergency funding that went to multi-million greenback operations like Ruth’s Chris Steak Home, the L.A. Lakers and Shake Shack go away lots of of struggling mother and pop companies out within the chilly?
That’s the query on the thoughts of Utah Democratic Rep. Ben McAdams, who is ready to name for greater transparency, and accountability, for the lots of of billions in funding that was earmarked for serving to small companies in misery as a consequence of COVID-19 associated financial fallout.
Some 21,000 Utah companies have been authorized for over $3.6 billion in federal emergency loans earlier this month within the first spherical of disbursements from the Paycheck Safety Program. That effort was seeded with $350 billion from the $2.2 trillion federal stimulus bundle handed in mid-March by Congress after which resupplied with a further $310 billion in funding final week.
The U.S. Small Enterprise Administration, the company tasked with overseeing this system which disburses funds by loans originated by native lenders, has launched some aggregated details about the place the Paycheck Safety loans have gone, however to date, no particulars about precisely who did, and didn’t, get assist by this system.
“The money behind these loans comes from our hard-earned tax dollars and we need to make sure not a penny is being wasted,” McAdams stated. “It’s essential for folks to see who’s getting the loans and for the way a lot.
Whereas Deseret Information requests for extra detailed info on first spherical Paycheck Safety Program loan disbursement have been declined by the Small Enterprise Administration, McAdams stated he and different congressional members have additionally been precluded from seeing which firms of their house states are getting loans and in what quantities. He additionally famous that experiences surfacing about mega-operations just like the Lakers, Shake Shack and others getting cash that was presupposed to go to small companies isn’t instilling a way of confidence.
“The stories I’m hearing are alarming,” McAdams stated. “I just want to make sure that the second round is allocated more fairly and that we’re not pushing small business to the back of the line, especially those businesses that don’t have anywhere else to look for a lifeline.”
The Paycheck Safety Program offers federally assured loans to eligible small companies in quantities as much as $10 million and could also be partially forgivable. The accessible financing can present companies that make use of 500 or fewer with funds equal to 2.5 instances the corporate’s common month-to-month payroll bills.
Following the shut of the primary spherical of Paycheck Safety funding, Utah Credit score Union Affiliation President Scott Simpson stated at a information convention that about 74% of the loans secured by Utah firms have been $150,000 or much less, reflecting that portion of funding having gone to precise small companies.
However, that accounting nonetheless leaves hundreds of recipients that acquired bigger — and in some instances a lot bigger — loan quantities in Utah.
One Utah enterprise, the publicly traded biotech agency PolarityTE, introduced it had been authorized for $3.6 million in help through the Paycheck Safety Program.
In an announcement included in a submitting with the U.S. Securities and Exchange Fee, PolarityTE CEO David Seaburg additionally famous the corporate had nearly $40 million cash available as of March 31.
“We closed the first quarter with approximately $39.5 million of cash on hand and, as announced last week, we also received a $3.6 million loan under the Paycheck Protection Program operated by the U.S. Small Business Administration,” Seaburg stated.
In the identical submitting, the corporate reported it was experiencing, because of COVID-19 impacts, a slowdown in gross sales of its skin-regenerating merchandise and was taking cost-cutting measures in response to decreased enterprise quantity. These measures, in line with the corporate, embody decreasing payroll bills, decreasing discretionary spending to “minimal levels” and managing manufacturing capacities “to ensure sufficient levels to support current procedure volumes.”
However in one other SEC submitting submitted simply days after it introduced its Paycheck Safety award, PolarityTE introduced annual 2019 bonuses of $165,000 and 115,000 shares of firm stock for Chief Working Officer and President Richard Hague; 100,000 shares of stock and $125,000 cash for Cameron Hoyler, PolarityTE’s basic counsel, secretary and govt vice chairman of company growth and technique; and 315,000 shares of stock for Seaburg. The identical submitting indicated the three executives additionally acquired lots of of hundreds of shares of restricted stock as a part of PolarityTE’s 2020 fairness funding program. As of the top of normal buying and selling Tuesday, PolarityTE stock was buying and selling at $1.07 per share.
In an announcement, PolarityTE stated the knowledge from the SEC filings doesn’t current the complete story of the corporate’s present monetary situation nor the financial impacts it’s struggling as a consequence of COVID-19.
“PolarityTE is very grateful to have received the $3.6 million loan as part of the Paycheck Protection Program,” the assertion learn. “Whereas we’re a publicly traded firm, we’re a small enterprise. We make use of 130 people in Utah and throughout the nation and our whole group is dedicated to bettering the lives of sufferers by our progressive know-how platform.
“We are an early stage biotech company and our most recent public financial statement shows we realized a substantial operating loss in 2019, which means we depend on outside financing to operate and make payroll. Unlike large public companies, PolarityTE does not have easy access to capital markets. In addition, COVID-19 has adversely impacted our commercial operations. The Paycheck Protection Program loan that we received will help support the crucial work we do for patients and allow us to continue our operations during this difficult time by covering payroll and rent expenses. In short, we have the need for assistance the Paycheck Protection Program was intended for and we applied for the loan to meet that need.”
The corporate additionally famous that prime executives had taken a wage discount in 2019 and {that a} 10% wage minimize had additionally been applied just lately for executives and staff.
“We applied for the Paycheck Protection Program loan based on the criteria that were published by the program’s administrators, which allowed us to qualify for the loan that we received,” the corporate stated. “We appreciate the federal government’s support, which is helping our employees to continue their important work and continue earning their wages during this most difficult period for our country, our company, and the health care industry that our team works so tirelessly to serve.”
Whereas McAdams didn’t name out any specific firm in his feedback, he did notice that each jumbo loan made to firms whose want for the assistance was questionable was the equal of many loans that homeowners of small Utah companies missed out on.
“For every one, well-connected big business that gets $4 million they don’t need, there are 20 small businesses that get nothing,” McAdams stated.
Of the $310 billion in second-round funding Congress authorized final week for the Paycheck Safety Program, a part of a $484 billion bundle, some $60 billion was put aside for small banks and another community of neighborhood growth banks that target growth in city neighborhoods and rural areas ignored by many lenders.
McAdams stated when the U.S. Home reconvenes he’s able to push laborious for better transparency and accountability within the disbursement of federal COVID-19 reduction funds and famous it is just by an open course of that lawmakers, and the taxpaying public, can assess the equity of emergency funding distribution.
“No one should have to be a sophisticated, well-connected business to get the help they need,” McAdams stated. “We need a way to certify that those who took the funds actually needed it. I’m going to be looking to see if this was all done appropriately.”
The Small Enterprise Administration reported that as of Tuesday afternoon, the second spherical of Paycheck Safety Program funding had authorized loans for over 475,000 U.S. companies for $52 billion in emergency loans. The primary spherical of funding funneled $350 billion in loans to some 1.7 million companies.
