AutoNation, a Fortune 500 auto retailer worth $3billion, received nearly $95million in PPP funds by using separate tax IDs to apply for loans at dozens of dealerships
- The $95million received by AutoNation is said to have been spread among dozens of their more than 300 locations
- Company executives claim that they intended to use the funds to help employees
- AutoNation Executive Vice President Marc Cannon said that the company’s board voted on Thursday to return the funds
- Publicly held firm has 26,000 employees across 18 states
- They used separate tax identification numbers assigned to the locations to apply for at least $266million
- Dealerships included in the handouts were Jaguar and Land Rover Bethesda, Prosche Orlando and Lexus of Cerritos
- Executives reported internally that AutoNation’s western division received $79million while the eastern division received $15million
- President Donald Trump on Friday signed into law a $484 billion economic measure designed to give additional relief to small businesses
A Fortune 500 auto company worth $3billion received nearly $95million in federal small-business funds, almost double the amount of any company that received money through the Paycheck Protection Program.
The $95million received by AutoNation is said to have been spread among dozens of their more than 300 locations and intended to use the funds to help employees. Funds for PPP ran out last week, with thousands of small businesses left without a dime.
AutoNation Executive Vice President Marc Cannon said that the company’s board voted on Thursday to return the funds, the Washington Post reports.
The $95million received by AutoNation is said to have been spread among dozens of their more than 300 locations
AutoNation Executive Vice President Marc Cannon said that the company’s board voted on Thursday to return the funds
The publicly held firm has 26,000 employees across 18 states, but used separate tax identification numbers assigned to the locations to apply for at least $266million in funds for separate dealerships.
These included Jaguar and Land Rover Bethesda, Prosche Orlando and Lexus of Cerritos.
‘The majority of our dealerships are able to apply for this,’ executive James J. Murphy said in a call last week, according to an anonymous employee who was on the call.
Spreadsheets were compiled to see which dealerships had applied, been approved and received the funds.
What is the small-business relief program?
The Paycheck Protection Program exhausted its $350 billion in funding last week and many small businesses were unable to obtain loans they desperately need to stay afloat.
Congress and the White House say they’re close to an agreement on that would give the program about $300 billion in fresh funds.
The government program, which is overseen by the Treasury and administered by the Small Business Administration, limits loan recipients to businesses with fewer than 500 employees and revenue of less than $2.5 billion.
But it makes an exception for restaurants and other food service businesses that employ fewer than 500 people per location, meaning that restaurant chains are as eligible for the loans as a neighborhood restaurant or bar.
The small business lending program is part of the $2.2 trillion rescue package approved by Congress last month.
Executives reported internally that AutoNation’s western division received $79million while the eastern division received $15million.
More than 81 locations received loan money, including $4.6million given to the Audi dealership in Bellevue Washington and $2.7million for a Toyota Mall location in Georgia.
Cannon said that the company ‘was clearly eligible and applied on behalf of the 7,000 employees furloughed caused by the COVID-19 crisis.’
‘AutoNation intended to rehire all 7,000 associates under the PPP program as encouraged by the government and designed to get individuals back to work,’ Cannon added. ‘From the beginning, AutoNation decided that all PPP funds would be used only for our employees and nothing else.’
In the Thursday board vote, Cannon said that it was decided ‘to cancel all PPP applications and return all PPP funds by the safe harbor date of May 7th.’
Under the $2trillion Cares Act economic stimulus package, separate affiliates of a corporation could apply for the small-business funds independently.
The Small Business Administration asked companies that were well-funded to consider returning the loans by May 7.
‘Small businesses don’t have investors or millions in cash and credit to weather this storm,’ one company employees said. ‘AutoNation could have made it through without taking these loans out.’
The publicly held firm has 26,000 employees across 18 states, but used separate tax identification numbers assigned to the locations to apply for at least $266million in funds for separate dealerships
These included Jaguar and Land Rover Bethesda, Prosche Orlando and Lexus of Cerritos (pictured)
Executives reported internally that AutoNation’s western division received $79million while the eastern division received $15
The funds were designated to help companies that had fewer than 500 employees that are unable to obtain credit.
Table: Some of the public companies, listed in order of their market value, who have received loans from the Paycheck Protection Program set up to help small businesses
President Donald Trump on Friday signed into law a $484 billion economic measure designed to give additional relief to small businesses
The AutoNation employee said that the company received ‘an obscene amount for any company to take out of this fund that was intended to help keep our communities intact.
An AutoNation general manager, also speaking anonymously, said it was ‘disappointing that a large publicly traded company can cloak itself in these different entities so that it can reach out and grab these millions of dollars.’
He also shared that all decisions had been made by executives, adding that ‘none of us at the store level had any idea that we were applying for this money. That was all done at the corporate level.’
‘That’s left these mom-and-pop retailers, restaurants, barbershops, day-care centers, so that they can’t get money because the swift attorneys at companies of our size can swoop in and get this money and they can’t. I just find it appalling. I don’t think that was the intent of the money,’ the general manager stated.
WHAT’S IN THE $484 BILLION CORONAVIRUS RELIEF BILL?
The House passed the emergency interim relief package Thursday night after the Senate finally came to an agreement on the legislation and moved it through the upper chamber Tuesday afternoon. Heres where the $484 billion is going:
- $320 billion for Small Business Administration’s Paycheck Protection Program
– $125 billion of that will go to the minority and women-owned businesses and ‘little mom-and-pop stores’ that don’t have a good banking connections
- $30 billion to increase production and distribution of coronavirus tests
– $11 billion of that will go to the states to boost testing at a local-level
- $75 billion for hospitals
- $60 billion for the Small Business Administration’s Economic Injury Disaster Loan program
- Any remaining funds will go to the Centers for Disease Control and Prevention, the National Institutes of Health and other agencies supporting coronavirus mitigation
AutoNation has undergone some leadership change. Chief executive Cheryl Miller took a leave of absence earlier in the month and was replaced by Chairman Mike Jackson. On Wednesday, the company named Jim Bender as the new president.
While refusing to release a list of companies that all received loans under the PPP, the administration has said that the PPP provided funding to more than 1.6million small businesses in all 50 states. 74 per cent of the loans were for amounts under $150,000.
More than 80 publicly traded companies have reported receiving the PPP money – excluding AutoNation.
Ashford Inc., a hospitality real estate business with several subsidiaries, has already received $30million in loans from the US Paycheck Protection Program set up by the federal government to help small businesses keep paying their workers and bills.
Public filings show that the group’s subsidiaries also took home $12.8 million in loans and subsidiaries of affiliate company Braemar Hotels & Resorts have been granted $15.8 million.
This comes as CEO and chairman Monty Bennett, known for keeping exotic and endangered animals on his Dallas ranch, and other major shareholders including his father, have reportedly pocketed millions of dollars in preferred dividends as the coronavirus pandemic wages on.
Bennett is a major Trump donor, giving money to his race for the White House back in 2016 and donating $150,000 in the last six months for his reelection campaign, according to Federal Election Commission records.
Ashford Inc., a hospitality real estate business with several subsidiaries, has already received $30million in loans from the US Paycheck Protection Program set up by the federal government to help small businesses keep paying their workers and bills
The number of jobless claims in the United States has soared, with more than 4.4 million people filing for unemployment last week
The PPP was created by Congress and designed to loan money to small businesses with 500 employees or less to help them survive the economic downturn during the coronavirus crisis, ensuring they can still pay their employees and bills, and avoid mass layoffs.
Companies that use the money to avoid layoffs will not have to pay the money back.
However, multi-million dollar public companies lined up for the federal loans and bled the pot dry, with the government announcing last week the money had run out before smaller, eligible firms could get a dime.
Due to legal loopholes, some large public companies with thousands of employees and easy access to credit were able to claim relief dollars through the scheme, depriving smaller businesses of tax-backed funds that could save them from going under.
The program has a $10million limit, but large firms such as Ashford with its 7,000-plus workforce have been able to spread the claims over multiple subsidiaries with staff of less than 500 so that they can take home more of the funds.
They got millions, we got nothing: Struggling small business owners demand new bailout funding does NOT go to corporate giants after nationwide chains got bailout cash
By Harriet Alexander for DailyMail.com
Small business owners are demanding that fresh funding for their struggling sector be tightly restricted, amid rising anger at large corporations claiming millions in aid.
An initial $347 billion in federal funding ran out last week, leaving tens of thousands of American entrepreneurs in the lurch until a deal to replenish it is signed into law by Donald Trump, which should happen Thursday.
But small businesses’ dismay was compounded by revelations that big nationwide chains were walking away with millions under the Payment Protection Program (PPP), while they were abandoned.
Small businesses are generally defined as having fewer than 500 employees, but the large companies have found loopholes in the terms of the deals and have been able to apply.
At least 75 companies whose applications were successful are publicly traded, and some have market values of well over $100 million.
Angel Criado, who with his wife Cree owns and runs a dance studio in Cleveland, Ohio, told DailyMail.com they have no received aid
Susan Cybulski, a 53-year-old graphic designer, has yet to receive any support for her Ann Arbor, Michigan-based company that specializes in event design
At least five successful applicants were being investigated by financial regulators, and a quarter of the sample of thousands of regulators’ filings had already warned months ago that they may not be able to stay afloat.
Ruth’s Chris Steak House, with more than 150 locations and $86 million in cash reserves, confirmed they were given $20 million.
The Chicago-based sandwich chain Potbelly, whose most recent financial disclosures show revenues of $102 million, said they received a $10 million loan.
Burger chain Shake Shack, which reported nearly $600 million in revenue for 2019, claimed $10 million. On Monday, amid growing outrage, the company announced it was giving it back.
Steve Mnuchin, the treasury secretary, said that 74 per cent of the 1.6 million loans that banks approved under the PPP scheme were for less than $150,000.
He said this showed ‘the accessibility of this program to even the smallest of small businesses.’
But Donald Trump admitted to problems and said some cash which has gone to big business might have to be clawed back.
Small business owners told DailyMail.com of their frustrating attempts to keep their businesses alive, while large firms flourished.
‘This is the sort of thing that drives me up the wall,’ said Angel Criado, who with his wife Cree owns and runs a dance studio in Cleveland, Ohio.
‘I just don’t get it. You’d have thought big companies like that would have had reserves?’
Criado, 50, had his business shut down due to COVID-19 on March 21 and applied to his bank – US Bank- for funding from the Small Business Administration (SBA) on March 30.
‘The minute they opened the gates I was on it,’ he told DailyMail.com.
His application for a $10,000 grant through the Economic Injury Disaster Loan (EIDL) scheme was rejected, after the SBA ruled that he had an unsatisfactory credit history. He had expanded his business in 2017, and so his personal credit rating ‘took a hit,’ he said.
Then on April 16 he received an email from his bank.
‘They said: ”hey, we’re out of money!”
Tara Lynn Baeza, 35, said she was ’emotional and angry’ at small businesses being left to collapse, while nationwide corporations are bailed out. Baeza owns Birds of Prey, which specializes in permanent makeup for clinical patients as well as an assortment of wellness treatments
‘I guess US Bank couldn’t get anyone through, because I was there right at the beginning – they said it was first come, first served, and I was among the first.
‘It makes me so mad that these huge companies get help and we don’t. They have whole teams of people working purely on getting their hands on this money. I just want to make a living for my family.’
The SBA say they have worked with 5,000 lenders to issue the loans and grants, but are yet to say how much of that money has actually been distributed.
They did not respond to DailyMail.com’s inquiry as to whether loopholes allowing large companies to apply would now be closed.
Susan Cybulski, a 53-year-old graphic designer, is also yet to receive any support for her Ann Arbor, Michigan-based company, InPrint, which specializes in event design.
In the second week of March she lost $15,000 worth of contracts and, in the subsequent weeks, her remaining work has ‘evaporated’.
On Monday the University of Michigan, her biggest client, emailed to say there would be no more work for ‘non-essential contractors’, meaning she is facing the very real likelihood of being unemployed for the rest of the year.
Cybulski applied for the EIDL immediately and was given a confirmation number, but is yet to hear back.
She had all her application documents for PPP prepared last week, and then the screen switched, she said, to: ‘We’re sorry, but all funds are exhausted.’
Big corporations receiving support through the programs ‘really angers me,’ she told DailyMail.com. ‘But it doesn’t surprise me.
‘Ten years ago, during the downturn, I lost my home. I worked so hard and jumped through all the hoops to save it, but they repossessed it – despite having 11 years of equity in there.
‘I saw what they did then, and it felt so unjust. This doesn’t surprise me now.’
Congress is expected to approve a further $350 billion in support this week, with a Senate vote Tuesday and House vote Thursday to send it to Trump.
But concerns linger that the support will once again go to large companies.
More than 12,000 people have signed a Change.org petition urging Congress to ensure the money only goes to small businesses.
Duncan MacDonald-Korth, who founded the COVID Loan Tracker, told DailyMail.com he launched the petition on Saturday night and has been astonished at the anger it has unleashed.
Around 700 people are signing per hour, he said, and Change.org got in touch to tell them how overwhelming the response had been.
Tara Lynn Baeza, 35, said she was ’emotional and angry’ at small businesses being left to collapse, while nationwide corporations are bailed out.
Her Philadelphia-based salon Birds of Prey, which specializes in permanent makeup for clinical patients as well as an assortment of wellness treatments, was closed on March 16.
She has applied for a gamut of funding from various agencies, but is losing $5,000 a week and is yet to receive any support.
‘It makes me so mad that these huge corporations get help and we don’t,’ she said. ‘I’m a member of a small business association in Philadelphia and everyone is saying the same thing – that they’ve been denied, or not heard back.
‘It really doesn’t feel like the system was set up for this.’