Public companies received $1 billion in stimulus funds meant for small businesses - The Washington Post

Public companies received $1 billion in stimulus funds meant for small businesses - The Washington Post

Public companies received $1 billion in stimulus funds meant for small businesses - The Washington Post

Posted: 01 May 2020 11:59 AM PDT

After the first pool of $349 billion ran dry, leaving more than 80 percent of applicants without funding, outrage over the millions of dollars that went to larger firms prompted some companies to return the money. As of Thursday, public companies had reported returning more than $125 million, according to a Post analysis of filings.

Other companies have said they plan to keep the funds, saying the loans had been awarded according to the program's rules and that they would use most of it to pay workers, as required, in order for the loans to be forgiven.

Treasury Secretary Steven Mnuchin has defended the program as a success, saying three-quarters of the loans were for totals of under $150,000. But after the first batch of loans was issued, the administration also scrambled to release new guidance for the program to discourage large public companies from applying.

Officials have urged publicly traded firms with access to other capital to return the money by May 7. Mnuchin said this week that all loans of more than $2 million would be audited with potential penalties for those who don't comply.

"I want to be very clear it's the borrowers who have criminal liability if they made this certification," of being a small business he said on CNBC.

The Small Business Administration has refused to release the names of companies that have received the loans, despite having released such information on its loan programs for years.

Some of the companies that received the loans were large in another way: Their CEOs have been making millions.

Veritone, a company based in Costa Mesa, Calif., that provides artificial intelligence technology, paid chief executive Chad Steelberg $18.7 million in total compensation in 2018, the last year for which data is available. His brother, Ryan Steelberg, the company's president, made $13.9 million. The company received $6.5 million in funding from the program. The company did not respond to a request for comment.

At least two other companies with highly paid CEOs have said they will return the money. Each changed its stance on the loans after the Treasury Department issued guidelines discouraging companies "with substantial market value and access to capital markets" from accepting the money.

Aquestive Therapeutics, a New Jersey pharmaceutical company, paid CEO Keith J. Kendall $2.6 million in 2019. That company received $4.8 million from the program but has said it will return it.

"As a small business, we were happy to qualify for a PPP loan, as it was originally written and intended, to continue to employ and provide health coverage to our 219 employees located around the country and provide important medicines to these patients during this period of crisis," the company said in a statement. "However, the new guidance issued on April 23 by the Federal Government appears to change the criteria for small businesses to qualify for the PPP loans."

Wave Life Sciences, a genetic medicine company, paid CEO Paul B. Bolno $5.8 million in total compensation in 2018. The company received $7.2 million from the program but has decided to return it, too.

"We made this decision after the SBA issued new guidance that states, in effect, that public companies are not appropriate recipients of these loans," the company said in a statement.

Chain restaurants and hotels were able to obtain tens of millions of dollars from the first pool of $349 billion in forgivable loans because Congress and the administration allowed multiple subsidiaries of large owners to each apply separately.

Those recipients include a group of hotel companies chaired by Monty Bennett, a Dallas executive and Republican donor, including Ashford Hospitality Trust and Braemar Hotels & Resorts. The companies used more than 100 filings to seek $126 million total and received $76 million.

On Friday, Senate Minority Leader Charles E. Schumer (D-N.Y.) questioned how companies such as Ashford had received so much funding, writing to Jovita Carranzak, administrator of the Small Business Administration, to say that such companies "may be exploiting the Program to the detriment of small businesses around the country currently struggling to survive the COVID-19 pandemic."

Some chains that have returned funds have done so at the expense of their workers. AutoNation, the Fortune 500 network of auto dealers, said last week that it would return the $77 million it received. The same day of the announcement, employees there said AutoNation put some workers back on furlough and rescinded wage guarantee deals to commission-based employees.

Marc Cannon, AutoNation executive vice president, issued a statement to The Post saying the pandemic had reduced sales by half and stores had rehired employees based on commitments of the federal program.

"It is regrettable that we must continue to mitigate the financial impact of COVID-19," the company said. "Those employees who were being funded by PPP are being re-furloughed. There is no FORGIVABLE loan available anywhere to rehire 7,000 employees."

Lindblad Expeditions, an operator of high-end cruises, also returned its PPP funds. The company initially said it planned to keep the money because it qualified for the loan and planned to use it to retain employees. On an earnings conference call Friday, chief executive Sven-Olof Lindblad repeated that the company met the application requirements, but said it would return the $6.6 million loan.

"We wanted to protect our employees for as long as possible," he said, but added there had been "much negativity" around public companies that received the loans.

While much of the program's criticism has focused on the relatively large companies that received the money intended for small businesses, there is some evidence that the program missed its target in other ways, too.

Research by academics at the University of Chicago and MIT indicates that the areas where small businesses have been most affected – New York and New Jersey, for example – were less likely to see loans from the program. The authors defined "most affected" using small-business employment data, cases of covid-19, the disease caused by the novel coronavirus, and other factors.

According to the research, only about 15 percent of businesses in the congressional districts most affected by business losses were able to obtain PPP help; by contrast, in the least affected congressional districts, 30 percent were able to obtain them.

"The loans were disproportionately allocated to areas least affected by the crisis," according to authors Joao Granja, Christos Makridis, Constantine Yannelis and Eric Zwick.

Jeanne Whalen contributed to this story.

Scammers targeting small business owners seeking SBA loans - WHSV

Posted: 01 May 2020 09:47 AM PDT

RICHMOND, Va. (WHSV) — As banks have worked nonstop in recent days to process new loans for small businesses through the Small Business Administration's Paycheck Protection Program (PPP), others are trying to exploit the opportunities available to scam small business owners.

The United States Attorney's Offices of the Northern and Southern Districts of West Virginia, the SBA, and the FBI are alerting small businesses to scams that are circulating relating to the CARES Act and PPP assistance.

They say they want to stop small businesses already struggling from closures due to COVID-19 from being victimized a second time by criminals using the SBA program as an opportunity to commit fraud.

"Those who prey on others look for opportunities like the various loans provided to small businesses. United States Attorneys and our respective law enforcement partners, like the FBI, are on the lookout for those predators. We strongly encourage those who become aware of such scams to report it to the authorities so we can take action" said U.S. Attorney Bill Powell, Northern District of West Virginia.

"Fraudsters will take advantage of any opportunity to steal money," said FBI Pittsburgh Acting Special Agent in Charge Eugene Kowel. "We recognize that criminals could try to prey on small businesses during this time of fear and anxiety. The FBI works closely with the private sector so companies can make informed decisions in response to malware attacks. Companies can prevent and mitigate malware infection by utilizing appropriate back-up and malware detection systems. They can also train employees to be skeptical of emails, attachments and websites they don't recognize. If you discover your business is the victim of a fraudulent incident, file a complaint with the FBI's Internet Crime Complaint Center at"

When the CARES Act was signed into law, the doors were opened for small businesses to access $349 billion in federal aid at a critical time for business owners trying to balance the health safety of their families while running a business.

The federal government approved an additional $310 billion in loans through the SBA after the program was quickly depleted, but many small businesses have struggled to get funding due to a bottleneck at the SBA that's slowed down the process.

In this round, banks have reported that they were being allowed to submit only 350 applications an hour, if that many. Meanwhile, they have thousands on hand.

As small businesses work to get funding through the program, though, ready to take drastic measures in some cases, those with bad intentions have taken note of the situation.

"Unfortunately, small businesses are being targeted at a time they are most vulnerable," noted SBA West Virginia District Director Karen Friel. "Look out for phishing attacks and scams utilizing the SBA logo. These may be attempts to obtain your personally identifiable information (PII), to acquire personal banking access, or to install ransomware or malware on your computer."

If anyone asks you for money to be able to process an SBA loan for you, they are not legitimate. Nor are any emails about SBA loans coming from sites not ending with ".gov."

Also, the SBA does not reach out to anyone to initiate a loan. Nor do they ask anyone for information that was already provided in the application process,

If you have any doubt, reach out to your nearest SBA office to ask. As you are working harder than ever to preserve your business and its employees amid the coronavirus pandemic, do not allow bad actors to hinder your efforts.

SBA's Office of Inspector General has published a list of possible scams and fraud schemes to raise public awareness:

You can report fraud, waste, abuse, mismanagement, or misconduct involving SBA programs to the SBA OIG hotline at (800) 767-0385, or online at:

To report any suspicious activity regarding the COVID-19 virus, residents are asked to call the National Center for Disaster Fraud Hotline at 1-866-720-5721or go to

U.S. Small Business Administration Speaks With KWGS About The Paycheck Protection Program In Okla. - Public Radio Tulsa

Posted: 01 May 2020 07:36 AM PDT

So far, the federal government has approved $660 billion in funding for small business loans through the Paycheck Protection Program. On Thursday, April 30th, Larry Weatherford, Oklahoma district public affairs specialist for the U.S. Small Business Administration, which administers the program, spoke with KWGS about the program's successes and criticisms, and encouraged any Oklahoma small business owners who haven't yet applied for assistance to do so as soon as possible before funding runs out.

St. Lawrence County businesses warned of rising fraud connected to Small Business Administration loans - North Country Now

Posted: 01 May 2020 02:40 PM PDT

Sophisticated fraud and scam attempts are on the rise in connection with federal Small Business Administration loans. If you are considering applying or are in the process of applying for the Paycheck Protection Program (PPP) or Economic Injury Disaster Loan (EIDL), please keep the following tips in mind:

The SBA does NOT initiate contact with small businesses on any type of funding. If you are proactively contacted by someone claiming to represent the SBA, suspect fraud.

If you are contacted by someone who promises to get you approval of an SBA loan but requires ANY payment up front or offers a high interest bridge loan, suspect fraud.

The SBA has limits on the fees a broker can charge a borrower:

3% - loans $50,000 or less

2% - loans $50,000 to $1,000,000

An additional 1/4% on amounts over $1,000,000

Any attempt to charge more than these fees is inappropriate and should be reported.

Keep an eye out for phishing attacks/scams utilizing the SBA logo. These may be attempts to obtain your Personally Identifiable Information (PII), or to install ransomware/malware on your computer.

If you are in the process of applying for an SBA loan and receive email correspondence asking for PII, ensure that the referenced application number matches your actual application number.

Any email coming from the SBA will come from an email account ending in

The presence of the SBA logo on a website does NOT guarantee the information is accurate or endorsed by the SBA. Cross-reference any information you receive with the information available at

Please report any suspected fraud at the following:

Office of Inspector General (OIG) Hotline: 800-767-0385

Online at

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