Main Street bailout rewards U.S. restaurant chains, firms in rural states
(Reuters) - Now a picture is emerging of who got the money. More than 25% of the total pot 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 U.S. Small Business Administration - totaling $342.3 billion as of Thursday - went to companies in all 50 states, the District of Columbia and five U.S. territories, and were spread across all 20 of the main industry sectors.
Congress directed the SBA to award $349 billion to struggling businesses with 500 or fewer workers as part of a $2.3 trillion coronavirus aid package that President Donald Trump signed into law on March 27. The Payroll Protection Program (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 three biggest state economies - California, Texas and New York - accounted for 23% of the loans, more than $82 billion. Meanwhile, businesses in a number of small, rural states that have avoided the brunt of the outbreak took home a disproportionate share of the pie.
The business sector receiving the most money was construction, with 13% of the total. The sector represents less than 9% of overall employment among U.S. firms with 500 or fewer employees, according to U.S. Census Bureau data from 2017, the latest available.
Companies on the front line of the virus - in the accommodation and food services sector - received about 9% of the pot while representing nearly 14% of workers among sub-500 person firms.
(GRAPHIC showing a state-by-state breakdown: here)
(GRAPHIC showing breakdown by industry: here(
(GRAPHIC showing states' share of loans vs small business activity: here)
MAIN STREET? WALL STREET?
Loans of $2 million or more made up nearly 28% of the total, and those of at least $5 million accounted for 9%, with a number of those going to companies with access to public securities markets.
At least 60 publicly traded firms have claimed a share of the total, according to Securities and Exchange Commission 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 and Ruth’s Chris Steak House - appear to have taken advantage of a provision in the CARES act that allows companies with more than 500 workers overall to get loans.
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.
Shake Shack Inc, Ruth Hospitality Group Inc, Potbelly Corp and Fiesta Restaurant Group’s Texas Taco Cabana all borrowed $10 million under the program through JP Morgan Chase & Co, SEC filings show.
Hallador Energy Co, which operates coal mines, received $10 million from First Financial Bank.