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Companies that gave back their stimulus loans

  • Companies that gave back their stimulus loans

    Amid nationwide lockdowns and quarantines during COVID-19, job losses soared, travel was severely restricted, financial markets tossed and turned, and consumer demand for much of anything beyond food and toilet paper took a nosedive. Small businesses, which comprise about half of the nation’s private sector employment, laid off and furloughed workers, slashed salaries, discounted prices, and scrapped capital improvements—frantic measures to cut costs and stay afloat in the crisis that had no end in sight.

    Hence the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act , with its Paycheck Protection Program (PPP) to keep workers at small businesses employed. The loans distributed by the U.S. Small Business Administration (SBA) through participating banks would be forgiven if three-quarters of the money went to payroll, and companies kept their workforce at or above year-ago levels. The interest rate was 1%.

    Congress allocated $349 billion, but the money ran out in less than two weeks—so it added an additional $310 billion. Large companies received huge loans, and small mom-and-pop shops complained that they were turned down flat. The Treasury Department and SBA started issuing dozens of loan guidelines and updates that sent businesses into a tailspin. Borrowers said the rules were changing like sand shifting beneath their feet. The new guidelines said borrowers must certify that their loan request was necessary, given “their ability to access other sources of liquidity.” The Treasury Department said it was “unlikely that a public company with substantial market value and access to capital markets” could prove it needed a loan.

    Companies were eventually told they could repay the money without penalty if they had applied in good faith. But loans over $2 million would be reviewed, subjecting companies to the uncomfortable prospect of an audit. An outraged public asked how a giant company like restaurant chain Shake Shack could be considered small. It fits the bill, actually, because while it has a workforce of almost 8,000 people, only about 45 work at each of its 189 U.S. locations. Offered the opportunity to return the loans, dozens of companies did just that. Most concluded the uncertainty and the price of defending themselves was not worth it.

    Stacker compiled a list of companies that gave back their stimulus loans, using data from COVID Stimulus Watch as of May 15. The companies are ranked by size of loans received—the biggest of which was $77 million.

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  • #65. Maui Land & Pineapple Company

    - Loan amount: $246,000
    - Industry: real estate

    Maui Land & Pineapple Company develops and manages residential, resort, and commercial property, including Hawaii’s largest private nature preserve. In an earnings report, it said operations were likely to be affected by business closures, unemployment, financial market instability, and reduced tourism. Hawaii implemented a mandatory 14-day self-quarantine for airport arrivals, including inter-island travelers. The company said it had fewer real estate commissions, less revenue, and less rental income from commercial tenants.

  • #64. Enochian BioSciences

    - Loan amount: $272,700
    - Industry: biotechnology

    Enochian BioSciences, based in Los Angeles, returned its loan without making any public comment. The company works to develop gene-modified cell therapies in hopes of preventing, treating, and curing infectious diseases (including HIV) and cancer.

  • #63. Helius Medical Technologies

    - Loan amount: $323,000
    - Industry: medical devices

    Just days after getting its loan, Helius, which develops technologies and products for patients with neurological damage, was awarded so-called breakthrough status by the U.S. Food and Drug Administration for its device to treat walking impairment in multiple sclerosis patients. The company’s stock soared some 70% upon news of the designation, which allows a speeding-up of the device’s development.

  • #62. Soleno Therapeutics

    - Loan amount: $350,445
    - Industry: pharmaceuticals

    Soleno Therapeutics, a biopharmaceutical company, is developing therapies for the treatment of rare diseases, particularly Prader-Willi Syndrome (PWS). The major symptom is hyperphagia, a chronic feeling of insatiable hunger, along with cognitive disabilities and developmental delays. Soleno said the health crisis had not left a “meaningful impact” on the development process for PWS therapy, but clinical trials were affected. It returned the loan without any comment to investors on its website.

  • #61. BioXcel Therapeutics

    - Loan amount: $537,000
    - Industry: pharmaceuticals

    BioXcel recently held a public stock offering to raise about $64 million for development of a drug that treats acute agitation. It told analysts it was trying to speed up development in hopes of using the drug for elderly COVID patients—especially those on ventilators, suffering delirium.

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  • #60. Windtree Therapeutics

    - Loan amount: $546,600
    - Industry: biopharmaceuticals

    Windtree Therapeutics, a biotech and medical device company focusing on acute cardiovascular and pulmonary diseases, recently said it was developing plans to study one of its products for treating lung injury from severe COVID-19 infection. It also said it arranged financing for up to $3.9 million for development of its product to treat premature infants with respiratory distress syndrome. It returned the loan without any mention in its most recent earnings report to investors.

  • #59. Motus GI Holdings

    - Loan amount: $780,942
    - Industry: medical devices

    Motus GI Holdings, Inc., which just reported a first-quarter loss, makes a medical device to improve visualization during colonoscopies, which was only launched commercially at the end of 2019. In response to COVID-19—particularly the drop in the number of colonoscopies being performed—the company implemented a cost-reduction plan to cut forecast cash expenses by half. It included reductions in project spending and a reduction in headcount in its Israel and U.S. operations.

  • #58. Issuer Direct Corporation

    - Loan amount: $1.0 million
    - Industry: compliance services

    Issuer Direct is a maker of communications and compliance technologies and services for corporate users. The company recently upgraded its product platforms so investor conferences and annual shareholder meetings could be held remotely, in real time and in compliance with securities regulations. It said revenue from those products would help offset losses in other parts of its business.

  • #57. 22nd Century Group

    - Loan amount: $1.2 million
    - Industry: low-nicotine tobacco products

    22nd Century Group has not said publicly why it returned its $1.2 million loan. It had implemented a round of January job cuts. The plant-biotech company conducts reduced-nicotine tobacco research and development and makes cigarettes with varying levels of nicotine content used in research. It recently announced successful trials for its technology to reduce nicotine in tobacco plants by up to 99%. In response to COVID-19, the company said its R&D lab in Buffalo, New York, was temporarily closed, but its production facility in North Carolina was classified as an essential business and remained operational.

  • #56. Nathan's Famous

    - Loan amount: $1.2 million
    - Industry: restaurants

    The iconic hot dog and restaurant company said it was returning its loan in light of the SBA guidance. It said that due to COVID-19, most of its franchised locations were temporarily closed.

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