While small businesses waited, publicly-traded NC companies collected PPP loans
Five of the companies, big enough to have their stock publicly traded, have since returned the PPP money.
While small businesses failed to secure approval for early Paycheck Protection Program loans, federal financial filings show at least 15 publicly traded companies across North Carolina received a combined $37 million in federal relief. Five of the companies, big enough to have their stock publicly traded, have since returned the PPP money.
Chapter 1 Air T
Air T, an aviation company in Denver, received the largest PPP loan in the state for a publicly traded company, according to WCNC Charlotte's review of federal records.
A Securities and Exchange Commission filing shows the company entered into an $8.2 million PPP loan agreement on April 10. The company's most recent annual report last year listed 769 full-time employees.
The company did not respond to our request for comment.
Air T is far from the only one to receive a loan in the early days of the program.
Chapter 2 PPP Repayment
Financial records show Kewaunee Scientific Corporation, a Statesville healthcare furniture company with 850 listed employees, received $7.9 million in early May, but returned the money a week later.
"On May 14, 2020, following review of guidance issued by the United States Treasury Department and the U.S. Small Business Administration on May 6, 2020, Kewaunee Scientific Corporation (the "Company") returned all funds it previously received pursuant to the Paycheck Protection Program ("PPP") established under the Coronavirus Aid, Relief, and Economic Security Act," the company said in a SEC filing.
Culp Inc, a High Point mattress and upholstery fabrics supplier with even more employees received $7.6 million in April, according to its SEC filing.
"The Company planned to use the proceeds from the Loan for covered payroll costs, rent, and utilities, in accordance with the applicable terms and conditions of the CARES Act, in order to retain more of its employees, maintain payroll and benefits, and make lease and utility payments while producing and supplying critical products for essential businesses during the unprecedented business disruption arising from the COVID-19 global pandemic," Culp Inc wrote. " Following the Company's application and receipt of the Loan, the SBA and U.S. Treasury Department issued new guidance regarding eligibility requirements under the PPP, raising questions regarding the eligibility of publicly traded companies to receive loans under the program. As a result, the Company, out of an abundance of caution, voluntarily repaid the Loan in full on May 13,2020."
Ballantyne Strong, a Charlotte cinema, advertising and insurance company with just under 300 employees received $3.1 million in April, but returned its loan later that month, according to SEC records.
"The Company intended to use the Loan for qualifying payroll, rent and utility expenses in accordance with the terms of the CARES Act. At the time the Company applied for the Loan, the Company believed it qualified to receive the funds pursuant to the PPP," the company's filing said. "On April 23, 2020, the SBA, in consultation with the Department of Treasury, issued new guidance that creates additional uncertainty regarding the qualification requirements for a PPP loan for public companies. The Company has less than 300 employees and continues to be severely impacted by the disruption to the cinema, theme park and advertising industries as a result of COVID-19. However, out of an abundance of caution and in light of the new guidance, the Board of Directors of the Company determined to repay the full amount of the Loan to the lender."
Chapter 3 The Waiting
While these companies received money, small businesses like Mal Pan initially were denied PPP loans.
Andre Lomeli was forced to lay off almost his entire staff at the 6-month-old Mexican restaurant in South Park. He said he applied for a federal loan during the first round of the program.
"I felt like at first the PPP initially wasn't being used for how it was intended," he said. "I just thought it was a free for all, kind of a cash grab at the time. It kind of peeved me a little bit, because some of these larger companies have the cash, they have the capital to withstand this."
Chapter 4 Federal Audit Request
Rep. Alma Adams (D), NC-12, outlined her concerns about the program and its lack of transparency in a letter to Congressional leadership last month. Following our discovery of widespread PPP delays, Rep. Adams and others called for a federal audit, also concerned by reports of other publicly-traded companies receiving loans.
"First of all, we don't know who got the money. We need to know who got it and how much they got," she said. "How small were these businesses? Did they need that support?"
Chapter 5 cbdMD Responds
SEC records show most of the public companies in North Carolina that qualified for PPP loans have less than 200 employees, including a Charlotte-based cbdMD that received $1.4 million on April 27.
"We qualified under all things that have been put out there or we would not have applied at first. We felt it was prudent to make adjustments now," cbdMD Chief Financial Officer Mark Elliott said. "The whole purpose is to deal with the uncertainty and to support our payroll and our staff."
The company's most recent annual report shows a workforce of 182 employees, but the CFO said the number is now between 165 and 170. Elliott described cbdMD as a "small public business" that dealt with a $5.6 million operating loss in the first quarter, did not have access to financing and desperately needed help. He said the company has no intention of returning the loan.
"There's just a tremendous amount of unknown and economic uncertainty," he said. " We don't know what's going to happen over the next several months."
Chapter 6 No Ill Will
Jeff Tonidandel knows the relief of landing a PPP loan. He owns Haberdish, Crepe Cellar, Growlers Pourhouse and Reigning Doughnuts. With just under 100 employees, he collected just under $700,000 during the second round of the program.
"It's a relief, because you see your bank account dwindling, dwindling, dwindling, down, down, down, every single day, every single week," he said. "The amount of money going to us is really small, but yes, it's going to help."
Tonidandel said he's sympathetic to companies, both big and small, pursuing PPP.
"Those people still need help," he said. "I don't have any ill will towards anyone trying to keep the business alive and to get the PPP money."
Chapter 7 All Is Well That Ends Well
Back at Mal Pan, Andre Lomeli takes comfort knowing he too received a PPP loan during the second round of the program. The government will forgive the $49,000 if the restaurant meets certain requirements.
"All is well that ends well," he said. "We can continue to operate and as an owner, sleep at night."
Chapter 8 Publically Traded Companies Receiving PPP Loans
AIR T
Loan Amount: $8,215,100
City: Denver
Industry: Aviation
Employees: 769
Returned: No
Comment: No
KEWAUNEE SCIENTIFIC CORPORATION
Loan Amount: $7,980,419
City: Statesville
Industry: Lab, healthcare and technical furniture
Employees: 856
Returned: Yes
Comment: No
CULP INC
Loan Amount: $7,605,500
City: High Point
Industry: Mattress and upholstery fabrics
Employees: 1,440
Returned: Yes
Comment: No
BALLANTYNE STRONG INC
Loan Amount: $3,173,900
City: Charlotte
Industry: Cinema products and services, digital signage, advertising and insurance
Employees: 290
Returned: Yes
Comment: No
TRANSENTERIX, INC
Loan Amount: $2,815,200
City: Morrisville
Industry: Medical device
Employees: 160
Returned: No
Comment: No
AKOUSTIS TECHNOLOGIES INC
Loan Amount: $1,633,225
City: Huntersville
Industry: Technology
Employees: 82
Returned: No
Comment: No
CBDMD
Loan Amount: $1,456,100
City: Charlotte
Industry: CBD
Employees: 182
Returned: No
Comment: Yes. "We qualified under all things that have been put out there or we would not have applied at first. We felt it was prudent to make adjustments now. There's just a tremendous amount of unknown and economic uncertainty. We don't know what's going to happen over the next several months." - Chief Financial Officer Mark Elliott
ISSUER DIRECT
Loan Amount: $1,025,000
City: Raleigh
Industry: Communications and compliance
Employees: 79
Returned: Yes
Comment: No
CHARLES & COLVARD, LTD
Loan Amount: $965,000 approved, but not yet received as of May 22
City: Morrisville
Industry: Jewelry
Employees: 63
Returned: N/A
Comment: No
NOVAN INC
Loan Amount: $955,800
City: Morrisville
Industry: Biotechnology
Employees: 42
Returned: No
Comment: No
MOBILESMITH
Loan Amount: $542,100
City: Raleigh
Industry: Healthcare procedure management, operational improvement and application services
Employees: 26
Returned: No
Comment: No
DATA 443 RISK MITIGATION, INC
Loan Amount: $339,000
City: Morrisville
Industry: Data Security and Privacy
Employees: 21
Returned: No
Comment: No
CICERO INC
Loan Amount: $283,917
City: Cary
Industry: Desktop activity intelligence, process intelligence and automation software
Employees: 14
Returned: No
Comment: No
TENAX THERAPEUTICS, INC
Loan Amount: $244,657
City: Morrisville
Industry: Pharmaceutical
Employees: 9
Returned: No
Comment: No
INNOVATIVE BIOPHARMACEUTICALS INC
Loan Amount: $220,205
City: Raleigh
Industry: Biopharmaceuticals
Employees: 8
Returned: Yes
Comment: Yes. "In light of the highly unpredictable economic trends brought on by the COVID-19 pandemic Innovate Biopharmaceuticals, Inc. filed for assistance from the Paycheck Protection Program (PPP) in April. At that time, the company met all eligibility criteria set forth by the Small Business Administration (SBA). Innovate sought that assistance to ensure financial stability for their small team ahead of a major upcoming milestone. The company was about to complete a merger to form a public company called 9 Meters Biopharma focused on life-threatening and life-altering gastrointestinal disease. By the time federal guidelines changed, Innovate had already received PPP assistance and completed its merger with two other companies to form 9 Meters. The unused PPP loan was returned promptly and with applicable interest." -9 Meters Biopharma
MGT CAPITAL INVESTMENTS
Loan Amount: $108
City: Raleigh
Industry: Bitcoin Miner
Employees: 3
Returned: No
Comment: No
SOURCE: SEC filings, annual reports and company interviews/statements