Luxury fashion and law firms among US bailout recipients – Financial Times

High-end fashion brands, Hollywood companies and some of the country’s top private schools are among the groups that have benefited from the US government’s small business bailout, according to a list of recipients released on Monday.

Also among the organisations that took between $5m and $10m from the government’s Paycheck Protection Program, according to the government, were big-name law firms including Kasowitz Benson Torres, which has represented Donald Trump, president, and Boies Schiller Flexner.

The disclosures come after months of controversy over whether the programme, crafted to protect the jobs of Americans employed by small businesses, was being used as intended. Monday’s data release provided a fuller picture of which businesses and organisations had benefited.

Topping the list are endowment-backed art institutions including New York’s Whitney and Guggenheim museums and the New York Philharmonic, which each received loans of more than $5m.

The luxury fashion brand recipients included New York-based Carolina Herrera — which is owned by the Spanish group Puig and was valued at more than $1bn as recently as 2016 — and Vera Wang, which each received between $2m and $5m of government money.

Rag & Bone, Alice + Olivia and Moda Operandi — the luxury online retailer helmed by socialite Lauren Santo Domingo — each received between $5m and $10m.

In California, director Francis Ford Coppola’s holding company Francis Ford Coppola Presents, which includes multiple resorts, restaurants and a winery, received between $5m and $10m from the government, as did the Gersh Agency — the Hollywood talent agency that ranks as the sixth largest and once represented the likes of Humphrey Bogart.

Private school recipients included Sidwell Friends in Washington, where Barack Obama’s and Bill Clinton’s daughters attended when their fathers were in the White House. Choate Rosemary Hall, the elite New England boarding school that educated president John F Kennedy and Ivanka Trump, was also listed as the beneficiary of a multimillion dollar loan — however, a representative for the school denied that it had received any funds.*

Other companies that drew money included Newsmax — the news outlet owned by Chris Ruddy, a confidante and financial backer of Mr Trump — and Renaissance Acquisition Company, the charity adviser in which Education Secretary Betsy DeVos holds a stake.

The US Treasury and Small Business Administration released the names of all organisations and companies that had received more than $150,000 from the PPP, the biggest programme in the federal government’s $2tn Cares Act, which sought to deliver quick relief to a locked-down economy. They did not release the exact amount of each loan, instead breaking them down by range.

Senior administration officials said the programme had kept 51.1m people in work thanks to loans totalling more than $520bn.

“The PPP is an indisputable success for small businesses, especially to the communities in which these employers serve as the main job creators,” said Jovita Carranza, the US small business administrator. “In three months, this administration was able to act quickly to get funding into the hands of those who faced enormous obstacles as a result of the pandemic.”

Steven Mnuchin, Treasury secretary, said 27 per cent of PPP funds had gone to “low and moderate income communities”, while the average loan size had been $100,000.

But critics have pointed to some of the big name businesses that have successfully managed to take advantage of the programme, even those that were publicly listed or had the kind of ready access to capital that most US small businesses did not.

Some 170,000 loans — amounting to about $38.5bn — had been returned by the end of May by organisations that did not meet the terms of the loan or because they had been told they were not one of the programme’s intended beneficiaries.

Companies that gave back the money included the restaurant chains Shake Shack and the Ruth’s Chris Steak House, which were initially granted loans totalling $10m and $20m, respectively, and the Los Angeles Lakers franchise which returned its $4.6m loan.

Not all similar companies returned the money. Among the big-name fast-food and restaurant chains that received loans of at least $5m or more were TGI Fridays, Sbarro, Legal Sea Foods and Five Guys.

The SBA and Treasury claim that the programme kept 51.1m Americans on companies’ payrolls is based on employment figures submitted by the companies that received PPP loans. In total, US small businesses employ 59.9m Americans, according to the US census. 

Recipients of PPP loans can have them forgiven if they use the money mainly to keep or rehire employees. The loans were disbursed via the country’s banks, which in turn have sold many of them on to the Federal Reserve. 

Bar chart of showing Smaller banks made higher PPP loans relative to total assets

The biggest US bank, JPMorgan Chase, was the biggest lender through the programme, arranging $29bn of loans despite a delayed launch of its platform. Bank of America, the only large bank that was ready to accept applications from the programme’s April 3 launch date, was the second biggest, with $25bn. 

The data also show how the big banks tried to work with more than just their largest borrowers, following a backlash for their involvement with companies such as Shake Shack. The average loan amount from JPMorgan’s borrowers was under $108,000, while BofA’s was just over $75,000. 

Truist and PNC, two of America’s largest domestic banks who loaned the third- and fourth-highest amounts in the programme, had average loan sizes of $166,000 and $179,000, respectively. 

Truist and PNC also loaned almost twice as much relative to the size of their domestic US business as JPMorgan and Bank of America.

Additional reporting by Christine Zhang in New York

*This article has been updated to include Choate Rosemary Hall’s denial that it had received PPP funds

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