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Los Angeles Lakers Got Money From Loan Program Intended For Small Businesses, Returned $4.6M
https://www.espn.com/nba/story/_/id/29104444/lakers-got-money-loan-program-returned-it
One of the NBA’s most profitable franchises, the Los Angeles Lakers have returned about $4.6 million in loans received from a federal government program intended to help small businesses keep employees on the payroll during the coronavirus pandemic.
The Lakers applied for relief through the Small Business Administration’s Paycheck Protection Program, and were approved during the first round of the program’s initial $349 billion distribution pool.
However, after reports that several large, highly capitalized or public companies were grabbing the money while hundreds of thousands of smaller businesses were shut out — the Lakers said they returned the money, ESPN reported on Monday.
The funds in round one were depleted in 10 days. Round two of PPP funding kicked off today, April 27, and funds are expected to be depleted within 48 hours.
“Money from the Small Business Administration for the Paycheck Protection Program isn’t going to the businesses it was intended for,” Al Root wrote for Barrons/Nasdaq. “The smallest operators are still struggling without any idea of when they can open their doors to the public again.”
There are still serious problems with the program, said Amanda Ballanyne, executive director of Main Street Alliance, an advocacy group representing small businesses.
“The dangerous inequities we saw with the first round will not be resolved” in the second round of funding, Ballantyne told the Washington Post. “With funding likely to run out in 48 hours, it is ludicrous that Congress thinks it has already done its job supporting small businesses.”
The PPP program was established as part of the $2.2 trillion CARES Act and launched on April 3 so that small businesses with less than 500 employees could apply for and receive loans to cover employee salaries and other expenses. Loans are forgivable if recipients spend 75 percent on payroll and don’t fire anyone. With about 300 employees, The Lakers were eligible for a PPP loan.
Shake Shack, a burger chain with a market capitalization of $2 billion, received a $10 million loannd returned it. Ruth’s Chris Steakhouse, which has 150 locations and employs 5,000 people, was one of the first publicly traded companies to get a federal SBA loan under the PPP. It has said it will return the money. Auto Nation, a Fortune 500 company, said it received $77 million.
Large companies such as Auto Nation can get under the 500-employee threshold and qualify because applications are done at the franchise level, even if they are part of large organizations, Nasdaq reported.
Several large hotel chains paid back their PPP loans after the public backlash, Washington Post reported.
There are about 6 million small businesses with less than 500 employees in the U.S., according to Barrons, but 44 percent of the SBA loans went to 4 percent of loan applicants. That’s about 67,000 applications taking almost half of the resources.
“The vast majority of these loans—74 percent of them—were for under $150,000, demonstrating the accessibility of this program to even the smallest of small businesses,” the SBA said in a press release of program statistics.
The Lakers had an estimated value of $4 billion before the coronavirus outbreak. The franchise has three billionaire minority partners — Philip Anschutz, Patrick Soon-Shiong and Ed Roski Jr. They have the league’s most lucrative local broadcast deal, which generates more than $150 million in annual revenue, ESPN reported.
They have promised not to lay off or furlough any employees, but tens of millions of dollars in revenue are at risk from lost ticket sales, lost local TV dates and the completion of the NBA regular season and playoffs in doubt.
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The SBA on Thursday issued new guidance discouraging applications from wealthier businesses in the new round that have access to credit markets and liquidity markets. “The Lakers are considered one such organization,” Kevin Arnovitz wrote for ESPN.
The funding includes money specifically for minority-owned businesses. The SBA has said publicly traded, well-capitalized companies are unlikely to qualify, and have until May 10 to pay back any money received under the program.
On Monday, SBA Administrator Jovita Carranza tweeted that more than $2 billion in funds had been returned (out of $349 billion).
“WHY DID YOU FUND THEM TO START WITH????? Corrupt”
@teriesenstenresponded on Twitter.
