APRIL 21, 2020

News Roundup for Small Business Owners

The latest news about relief efforts for small businesses, particularly via the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).

• More stories confirm large-business use of small business relief. The AP expanded on Forbes’ “Crony Capitalism” story from yesterday, finding 75 publicly traded companies received PPP Loans, and a quarter of those companies had, “warned investors months ago that they or their auditors had significant doubts about their ability to meet financial obligations.” Here’s a list of 40 public companies who received PPP loans with their market values and loan amounts. (Forbes, AP, CNBC)

• One such publicly traded company who received a PPP loan was Ruth’s Hospitality Group, parent of Ruth’s Chris Steakhouse. RHG received two $10 million PPP loans despite having $42 million in profit in 2019 (on $468 million in revenue) and cash reserves of $86 million. Despite receiving the PPP loans, most of their hourly staff was on furlough, and because those staff get compensated with tips, RHG can meet the forgivable threshold (75%) by retaining just 150 of its 5,700 employees. Disgusting. Based on the average loan amount of around $200K, this money could have helped 100 small businesses stay afloat. If this outrages you as much as it does us, please sign this Change.org petition to demand RHG returns its $20 million in relief aid.(GQ, Business Insider)
• I expect even more bad PR for companies as the media continues to dig further, such as this one from a company called MediMX, which received a loan despite having been issued a $6.5 million fine just 2 weeks ago for overcharging the VA. (Wall Street Journal)
• In somewhat brighter news, Washington has agreed in principle on a $450 billion aid package that would replenish the PPP with $310 billion, $60 billion of which is earmarked for banks with assets of less than $50 billion. The aid package will also include $60 billion for the EIDL ($10 billion in grants and $50 billion in loans), and $100 billion for testing and hospitals. The president has already indicated his endorsement (via Twitter, of course), the legislation has now passed the Senate. A House vote is expected Thursday. (The Hill, CNN)
• If you didn’t get a PPP last time, we encourage you to call your bank immediately to make sure you don’t need to reapply if and when this additional aid passes. Unfortunately, bankers are already warning that with all the unfunded applications already in queues, this new money will evaporate quickly, possibly in as little as 48 hours. We’d also suggest getting applications in at as many institutions as you can. Here’s a list of banks by location and asset size so you can find one in your area that might work for you. And here’s a list from last week of banks who are offering PPP loans to non-customers. (Politico)
• Further proving Murphy’s Law, the SBA announced that 8,000 small businesses may have had their data exposed to other businesses. This is something we heard anecdotes about a while back, when the EIDL application was in its earlier form. Applicants were logging on and finding the form filled in for other businesses. I think this issue is resolved now, but it does trouble me that the SBA was aware of this on March 25 and are just now making it public.(NPR)

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Masterplans is a veteran-owned business that specializes in providing the highest-level business development consulting located in Portland, Oregon. For 17 years we have helped thousands of entrepreneurs launch new businesses and put their ideas in motion. Now, more than ever, we want to see these same businesses survive the largest economic disaster of our generation.