Now a picture emerges of who got the money. Over 25% of the total pot went to less than 2% of the companies that got relief. They include a number of publicly traded companies with thousands of employees and hundreds of millions of dollars in annual sales.
Loans from the United States Small Business Administration – totaling $ 342.3 billion as of Thursday – have been extended to businesses in the 50 states, the District of Columbia and five U.S. territories, and were spread across the 20 main industrial sectors.
Congress has ordered the SBA to provide $ 349 billion to struggling businesses with 500 workers or less as part of a $ 2.3 trillion coronavirus aid package that President Donald Trump signed March 27. employee benefits, by providing small and medium-sized businesses with repayable loans to keep employees informed.
The SBA does not grant loans directly but rather supports loans made by participating financial companies.
The three largest state economies – California, Texas and New York – accounted for 23% of loans, or more than $ 82 billion. Meanwhile, businesses in a number of small rural states that have avoided the brunt of the epidemic have won a disproportionate share of the pie.
The business sector that received the most money was construction, with 13% of the total. The sector accounts for less than 9% of overall employment among US businesses with 500 or fewer employees, according to data from the 2017 U.S. Census Bureau, the latest available.
Businesses on the frontline of the virus – in the accommodation and food services sector – received about 9% of the pot while accounting for almost 14% of workers among businesses with fewer than 500 people.
(GRAPH showing state by state breakdown: here)
(GRAPH showing the distribution by industry: here (
(GRAPH showing the share of State loans in relation to small business activity: here)
MAIN STREET? WALL STREET?
Loans of $ 2 million or more accounted for almost 28% of the total, and loans of at least $ 5 million represented 9%, a number of them going to companies with access to public securities markets .
At least 60 publicly traded companies have claimed a share of the total, according to documents filed by the Securities and Exchange Commission. CARES law does not prohibit the payment of money to listed companies.
Some – including the holding companies of the well-known restaurant chains Shake Shack and Ruth’s Chris Steak House – appear to have taken advantage of a CARES provision that allows companies with more than 500 workers to obtain loans.
The exemption allows companies in the accommodation and food services industry to participate as long as they do not exceed 500 employees per physical location.
Fiesta Restaurant Group’s Shake Shack Inc., Ruth Hospitality Group Inc., Potbelly Corp and Texas Taco Cabana have all borrowed $ 10 million under the program through JP Morgan Chase & Co, according to SEC filings.
Hallador Energy Co, which operates coal mines, received $ 10 million from First Financial Bank.
All have more than 500 employees.
Shake Shack has closed 63 of its 120 locations worldwide, and has laid off or laid off more than 1,000 workers after a 28.5% drop in sales in March, he said in a file on April 17. It is not known how many of its 100 US stores remain open, but records showed that it employed 7,600 people at the end of 2019. The company, which generated $ 595 million in sales and net profit of $ 20 million dollars in 2019, said it would continue to pay all general managers and cover health insurance for all employees.
Texas Taco Cabana operates 164 outlets from Houston to Albuquerque. Fiesta, which also operates a chain of chicken restaurants in Florida and posted revenue of $ 661 million last year and a net loss of $ 84.4 million, employed 10,480 at the end of 2019 She did not immediately respond to a survey of the number of employees who would be covered by the loan.
Potbelly had 474 stores in 32 states, including 48 franchisees, and employed 6,000 people in late 2019, according to the documents. Last year, sales totaled $ 410 million, although they posted a net loss of $ 24 million.
“Every penny will be used to financially support the employees of our stores,” said Matt Revord, director of human resources at Potbelly.
Hallador employed 768 people in February 2020, its depots showed. He did not immediately respond to an email requesting comments.
SMALL STATES, BIG WINNERS
With PPP funds exhausted as of this week, new aid was blocked in Congress amid a partisan dispute over support for state governments and hospitals.
The economic pain of coronavirus-related outages has been felt across the country. SBA loans appeared to reach a higher proportion of businesses in republican-style states that imposed the lightest restrictions on business and had relatively few confirmed cases of coronavirus.
The SBA has granted 583 loans to 1,000 businesses in North Dakota, according to a Reuters analysis of data from the SBA and the Census Bureau. In California, SBA loans reached only 149 out of 1,000 companies.
The SBA has not released data on the number of companies applying for loans, either overall or in each state, so it is not clear what contributed to the higher proportion of companies in the so-called “Red States” obtaining loans.
“I find it hard not to think it’s political. Blue states like California have gotten a pathetic number of loans issued, ”said California Democrat Jackie Speier on Twitter.
Others said the disparity was due to the different types of lenders involved.
Smaller banks, which are more common in rural areas, were ready when SBA launched the program on April 3, while many large banks and non-bank lenders were unable to participate until the following week.
“The bankers here, they know the farmer, they know the hairstylist, they know the owner of the cafe,” said Republican representative Jeff Fortenberry of Nebraska, where SBA loans reached 558 out of 1,000 businesses.
Report by Andy Sullivan, Howard Schneider and Ann Saphir .; Editing by Dan Burns
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