Over 2 wks, the US government pledged $350-B to Main Street businesses across America desperate for cash after coronavirus lockdowns.
A picture is emerging of who got the money.
More than 25% of the total went to fewer than 2% of the firms that got relief. They include a number of publicly traded companies with thousands of employees and hundreds of millions of dollars in annual sales.
The loans from the US Small Business Administration totaling $342.3-B as of Thursday went to companies in all 50 states, the District of Columbia and 5 US territories, and were spread across all 20 of the main industry sectors.
Congress directed the SBA to award $349-B to struggling businesses with 500 or fewer workers as part of a $2.3-T coronavirus aid package that President Trump signed into law on 27 March.
The Payroll Protection Program, aka PPP was crafted to keep Americans off unemployment benefits, by giving small and mid-sized companies forgivable loans for keeping employees on the books.
The SBA does not make the loans directly but instead backs loans made by participating financial firms.
The 3biggest state economies; California, Texas and New York accounted for 23% of the loans, more than $82-B. Meanwhile, businesses in a number of small, rural states that have avoided the brunt of the outbreak took home a small share of the cash.
The business sector receiving the most money was construction, with 13% of the total. The sector represents less than 9% of overall employment among US firms with 500 or fewer employees, according to US Census Bureau data from Y 2017, the latest available.
Companies on the front line of the virus in the accommodation and food services sector received about 9% of the cash, while representing nearly 14% of workers among sub-500 person firms.
At least 60 publicly traded firms claimed a share of the cash, according to SEC filings. There is no prohibition in the CARES Act against money going to publicly listed firms.
Some, including the holding companies for well known restaurant chains Shake Shack (NYSE:SHAK) and Ruth’s Chris Steak House (NASDAQ:RUTH) took advantage of a provision in the CARES act that allows companies with more than 500 workers overall to get loans. Both borrowed $10-M under the program through JP Morgan Chase & Co, SEC filings show
The exemption allows for businesses in the accommodation and food services industry to participate so long as they do not exceed 500 employees per physical location.
With the PPP funds depleted as of this week, further aid has stalled in Congress amid a partisan dispute over support for state governments and hospitals.
The SBA has not released data on the number of firms seeking loans, either overall or in each state.
Have a healthy weekend, Keep the Faith!