At least 15 publicly traded Tampa Bay companies have received federal coronavirus aid loans worth more than $11.8 million combined, according to a review of U.S. Securities and Exchange Commission filings.
The forgivable loans, from the Department of the Treasury and Small Business Administration’s Paycheck Protection Program, range in size from $15,600 to $3.24 million.
Some companies were operating at a loss well before the pandemic. Some turned a profit in early 2020. One loan went to a corporation with assets valued at $238 million. At least half have seen their stock market values rise this spring and summer, including a Sarasota satellite communications company whose shares have jumped fivefold since March.
Most companies that received loans are not major corporations, but businesses with stocks valued at less than a dollar. None received close to the maximum of $10 million, and collectively they reflect a drop in the ocean of the $518 billion loaned to 4.9 million mostly private businesses thus far.
Yet as limited as the information from these companies is, it’s still a clearer window into how small business aid money is being spent than any data put forth by the federal government.
To date, the Treasury has only named recipients who got more than $150,000, and even then, their loan sizes were listed as a range, not a specific amount. The government did list specific dollar figures for loans worth less than $150,000, but not the companies that got them.
Public companies, on the other hand, are required to detail their finances to shareholders and the Securities and Exchange Commission. That includes loans and how they got them — and how they might affect a company’s bottom line.
While public companies were never barred from the program, the Small Business Administration’s official guidance calls it “unlikely that a public company with substantial market value and access to capital markets” could apply for a loan “in good faith.” Many public companies, including Shake Shack, Autonation and Ruth’s Chris Steak House, returned PPP loans after criticism from the public and lawmakers.
“The way it was written was that those loans were for companies that had no other alternative, and that’s not the only group that took out those loans,” said Columbia, S.C., financial planner Matt Frankel. “I don’t think anyone can make the case that some of these companies need the money, or have no other access to cash, because they have access to the public markets. It’s pretty easy for them to raise money if they want to.”
Critics who say the program was well-intended, but slapped together in a rush, are skeptical that all PPP loans will be used as intended. They also doubt federal agencies will exercise the oversight necessary to force companies to repay them.
“The PPP loan is what happens when you allow corporate lobbyists to draft your relief package,” said state Rep. Anna Eskamani, D-Orlando. “If the goal was to just give money to everyone, you succeeded. But if you were trying to center it on small businesses and nonprofits, it was a complete mess.”
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Paycheck Protection Program loans are open to any company that meets the government’s legal definition of a small business. That can be based on several factors, from number of employees to revenue to net worth, but recipients must spend most of the loan on payroll, rent and utilities in order to have it forgiven. (The Tampa Bay Times and its related companies received an $8.5 million loan in April.) The deadline to apply for a loan is Saturday.
“The management of a publicly traded company has a fiduciary duty to its shareholders,” Frankel said. “So if they’re offered free money, essentially, can you really make the case to your shareholders that it was in your best interest to not take it?”
A few noteworthy loans:
- Nicholas Financial, a lending company in Clearwater, froze hiring in March, then furloughed 40 employees in April. On May 27, it received a $3.24 million loan. About a week later, the company announced that it had “returned to profitability” in the most recent fiscal year, for a net income of $2.3 million. Its stock price has jumped nearly 70 percent since mid-April, surpassing where it sat in late February. As of March, Nicholas Financial had assets worth $238 million.
- Better Choice, a pet health food company in Oldsmar with around 70 employees in May, saw two of its subsidiaries obtain loans worth $400,000: TruPet LLC; and Halo, Purely for Pets, which it purchased in December for $28 million. In a recent filing, the company said COVID-19′s effect on its business was “uncertain,” and as of May, hadn’t seen “a material drop in sales.” In fact, as a result of its purchase of Halo, the company’s net sales for the quarter were up 244 percent.
- AutoWeb, which has 121 employees, secured a $1.38 million PPP loan. The company, which relocated its headquarters to Tampa last year, said it enacted furloughs, but no layoffs, during the pandemic; and that its top executives had taken pay cuts, which the loan would not restore. Its stock has doubled since a mid-March low of 67 cents. “I am proud of the work our team has done to help our clients meet the unprecedented business challenges of the coronavirus pandemic, and grateful that we have been able to preserve and invest in the team we have been growing in Tampa,” president and CEO Jared Rowe said in a statement.
- Early in the pandemic, Vislink Technologies, a satellite communications company in Sarasota, laid off and furloughed some of its approximately 150 full-time employees to help reduce costs by $5 million. In April, it got a $1.17 million PPP loan. Then in early June, the company’s stock shot skyward when one of its satellites was visible during coverage of the SpaceX Falcon 9 launch. Ever since, Vislink stock has largely stayed above 60 cents per share, five times its price in March.
- On May 4, Cool Technologies, LLC, which has patents on motor cooling technology and has two full-time and two part-time employees, received a PPP loan of $52,612. In the six weeks prior, the company had defaulted on three loans worth a combined $625,000. The company has lost $52 million since inception, according to its most recent annual report; and as of Dec. 31 had just $15,306 in cash on hand. Even with the PPP loan, the report said, the company had “substantial doubt” it could survive past this summer.
Emails and calls last week to Nicholas Financial, Better Choice, Vislink, Cool Technologies and other public companies that took PPP loans were not returned.
Not every company that got a loan kept it. Nobility Homes, a modular home manufacturer in Ocala, applied for a PPP loan at the start of the pandemic, when it looked like a lockdown might last months. When it became clear the company would survive without laying off workers, it returned its $1.75 million.
“We didn’t feel that it was right for us to keep that money, because we didn’t need it, wouldn’t have used it for anything,” said president and CEO Terry Trexler. “There was no reason for us to boost our bottom line at the expense of ... 15 or 20 other small companies that really needed it.”
For public companies who kept the loans, it may be months before they reveal to shareholders how they spent them, if they do so at all. State Sen. Jeff Brandes, R-St. Petersburg, called the loan program a “hot mess” that will be “selectively enforced” at best.
“You’re going to find the people that spent it exactly the way we wanted them to spend it is a small percentage of the overall people who got the funds,” Brandes said.
Last week, the Small Business Administration’s Office of Inspector General issued a report saying there were “strong indicators of widespread potential fraud” in the Economic Injury Disaster Loan Program, which is similar to the PPP program, although its funds do not have to be used for payroll. The report found “systemic issues” throughout the agency’s initial coronavirus relief response, which “need to be addressed immediately to reduce fraud risk and prevent further losses.”
Eskamani has called for more oversight and transparency in future coronavirus relief packages, including as it relates to public companies.
“If they are doing SEC filings, maybe they shouldn’t be applying for PPP,” she said. “That could be a very simple way to narrow it down.”
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Tim Tangredi was in Wuhan, China, in January, days before the coronavirus shut the country down. The CEO of Odessa’s Dais Corporation was there meeting clients for his business, which develops nanotechnology for polymers used in various products, and he had to scramble to get home.
Even then, he could see trouble coming. Dais’s Chinese market was going to be hit hard, even as the company started marketing polymers it said could “kill 99.99% of the human coronavirus.”
So Dais applied for, and received, a PPP loan of $54,430, as well as an Economic Injury Disaster Loan worth $150,000. The company shuffled its budget to put the PPP money toward payroll, and as a result didn’t have to cut its staff of 12 while trying to push out new products.
Tangredi said the fact that Dais is public shouldn’t preclude it from loan opportunities afforded to private companies, especially those much larger than his.
“You can’t just black-and-white say, ‘It’s a public company; they shouldn’t have any money,‘” he said. “A company is people. If people are going to be impacted in a negative way, then there’s nothing wrong with it at all.”
Even though Nobility Homes returned its PPP loan, Trexler agreed.
“I would like for some of those people to come out to our manufacturing plant and tell some of our employees that they aren’t as important as somebody that works for a mom-and-pop,” he said. “What we were trying to do is protect jobs and keep people working.”
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