Coronavirus small business money to these 5 companies should be returned: Democrats
Only 1 one the 5 companies has agreed to return their $10 million loan
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A Democratic-led House committee sent a letter to five companies Thursday requesting that they return their Paycheck Protection Program (PPP) loans.
The five include transportation operator EVO Transportation & Energy Services, Inc; construction service provider Gulf Island Fabrication, Inc; therapeutic biologics company MiMedx Group, Inc; technology solutions company Quantum Corporation; and steel products maker Universal Stainless & Alloy Products, Inc. MiMedx is the only company that has agreed to return its loan.
Congress and the Trump administration have allocated nearly $670 billion in funding for the PPP, designed to incentivize small businesses with 500 or fewer employees to retain workers during the coronavirus pandemic, but some small-business owners feel left out by the program.
(AP Photo/Tony Dejak, File)
As millions of mom-and-pop shops were left out of luck after funding ran dry, 387 publicly traded companies have tapped the government-backed program and received about $1 billion in coronavirus aid, according to Washington D.C.-based data analytics firm FactSquared. Nearly 50 companies have returned $350 million in PPP loans.
The committee selected these five companies because they are all publicly traded, have market capitalization of more than $25 million, have 600 employees or more and received $10 million loans, according to a press release.
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"Since your company is a public entity with a substantial investor base and access to the capital markets, we ask that you return these funds immediately," members of the House Select Subcommittee on the Coronavirus Crisis wrote in a statement.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| EVO | EVOTEC SE | 7.15 | -0.09 | -1.24% |
| GIFI | GULF ISLAND FABRICATION INC. | 6.36 | -0.03 | -0.47% |
| MDXG | MIMEDX GROUP INC. | 6.16 | -0.17 | -2.69% |
| USAP | UNIVRSL STNLSS | 26.14 | -0.11 | -0.42% |
| QMCO | QUANTUM CORP. | 0.43 | +0.02 | +5.76% |
The committee chaired by Rep. James E. Clyburn, D-S.C., added that returning funds "will allow truly small businesses—which do not have access to alternative sources of capital—to obtain the emergency loans they need to avoid layoffs, stay in business, and weather the economic disruption caused by the coronavirus crisis."
MiMedx announced in a Thursday press release that the company would be returning its $10 million loan.
"MiMedx Group, Inc. ... today announced that it is repaying the [PPP] Loan received through its application to the Federal relief effort. As announced previously, the funds enabled the Company to maintain full employment during a time of widespread uncertainty, producing skin-graft products for patients with serious wounds and burns," the company wrote.
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The company added that like other businesses, MiMedx has been negatively impacted by the pandemic and has "experienced softened sales due to restricted access, both for patients and our field personnel, and the cancellation of elective surgeries." MiMedx "implemented numerous cost-containment measures, including a temporary gradated reduction in compensation for all salaried employees in order to avoid layoffs."
A Quantum spokesperson told FOX Business that Quantum will be responding to Clyburn's letter, and the company would be doing a disservice to its employees by returning its PPP loan.
"Quantum believes it owes a duty to its American employees who would lose their jobs if Quantum returned its PPP loan to demonstrate why Quantum not only falls within the technical eligibility requirements of the PPP loan program, but also falls squarely within the spirit of what was intended by the CARES Act," the spokesperson said.
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The spokesperson added that without is PPP loan, Quantum "would most certainly be forced to reduce headcount."
None of the other companies responded to inquiries from FOX Business regarding the committee's letters.
Rep. Steve Scalise, R-La., criticized the House Democrats' "harassing" letters in a Thursday tweet, saying, "Dems spend more time shaming and investigating American workers and job creators than they do China. Telling."
House Minority Whip Steve Scalise speaks at the U.S. Capitol in Washington, Sept. 19, 2019. (Alex Edelman/Bloomberg via Getty Images)
He added that the Treasury Department is "reviewing loans received through the successful [PPP]," and the subcommittee's letters are "nothing more than reckless intimidation that could cause layoffs," and lawmakers should be more focused on helping U.S. families return to work and holding China accountable.
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Treasury Secretary Steven Mnuchin threatened legal action against companies last week during an interview with FOX Business.
"Anybody that took the money that shouldn’t have taken the money, one, it won’t be forgiven, and two, they may be subject to criminal liability, which is a big deal," Mnuchin said.
On Tuesday, the Department of Justice announced its first fraud charges against two New England men in connection with the program.
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The story has been updated to include comment from Quantum.