WASHINGTON — Companies with thousands of employees, past penalties from government investigations and risks of financial failure even before the coronavirus walloped the economy were among those receiving millions of dollars from a relief fund that Congress created to help small businesses through the crisis, an Associated Press investigation found.
The Paycheck Protection Program was supposed to infuse small businesses, which typically have less access to quick cash and credit, with $349 billion in emergency loans that could help keep workers on the job and bills paid on time.
But at least 75 companies that received the aid were publicly traded, the AP found, and some had market values well over $100 million. And 25% of the companies had warned investors months ago — while the economy was humming along — that their ability to remain viable was in question.
By combing through thousands of regulatory filings, the AP identified the 75 companies as recipients of a combined $300 million in low-interest, taxpayer-backed loans.
Eight companies, or their subsidiaries, received the maximum $10 million possible, including a California software company that settled a Securities and Exchange Commission investigation late last year into accounting errors that overstated its revenue.
The eight firms getting maximum loans are likely just a tip of the iceberg: Statistics released last week by the U.S. Small Business Administration showed 4,400 of the approved loans exceeded $5 million. Overall, the size of the typical loan nationally was $206,000, according to the statistics. The SBA will forgive the loans if companies meet certain benchmarks, such as keeping employees on payroll for eight weeks.
The list of recipients identified by the AP is a fraction of the 1.6 million loans that lenders approved before the program was depleted last week, but it is the most complete public accounting to date. Neither the Trump administration nor the lending industry has disclosed a list of Paycheck Protection Program beneficiaries.
Representatives of the SBA, which is overseeing the program, did not respond to a request for comment late Monday. But last Friday, Treasury Secretary Steven Mnuchin said in a written statement that most of the loans, 74%, were for less than $150,000 and that demonstrated "the accessibility of this program to even the smallest of small businesses."
President Donald Trump, asked Monday whether the criteria for who can receive loans should change, said that "we'll look at individual things and some people will have to return it if we think it's inappropriate." He added that the loans are supposed to be awarded, in part, by "what we think is right."
On Tuesday, the White House referred questions to the SBA and Treasury Department.
The AP analysis comes as lawmakers from both political parties negotiate an additional relief package that in large part would replenish the Paycheck Protection Program with more than $300 billion. Agreement was reached on major elements of the nearly $500 billion aid package for small businesses, including more help for hospitals and virus testing, said Senate Democratic Leader Chuck Schumer. He said he thought it would pass Tuesday.
AP's review also found examples of companies that had foreign owners and were delisted from U.S. stock exchanges, or threatened with removal, because of their poor stock performance before the coronavirus caused a downturn. Other companies have had annual losses for years.
Wave Life Sciences USA Inc., a Boston-area biotechnology company that develops new pharmaceuticals, received a $7.2 million loan. Weeks earlier, Wave Life Sciences, whose parent company is based in Singapore, disclosed in its annual report net losses of $102 million, $147 million and $194 million during the last three fiscal years.
"We currently have no products on the market and expect that it may be many years, if ever, before we have a product candidate ready for commercialization," it wrote.
In an emailed statement Monday, the company said: "The livelihood of our U.S. employees and their families would be severely disrupted if they were to lose their jobs or be furloughed. We are doing everything we can to support them."
Michael Minnis, who has studied the SBA program as an accounting professor at the University of Chicago Booth School of Business, said he understood the frustrations of smaller businesses that have not received funding when publicly listed companies have. But he said it would be hard to go into the program and change the parameters now.
"There's a fundamental trade-off here between speed and targeting this in the absolute best way," he said.
Minnis estimates the program might need to dispense $720 billion to meet demand.