Faced with the fast-spreading coronavirus pandemic, President Donald Trump quickly rolled out the Paycheck Protection Program, aiming to keep workers on the payroll at small businesses as business dwindled because of the COVID-19 shutdowns.
Among the Chicago-area companies to benefit, records show, were:
- A railcar manufacturer — which secured the maximum $10 million — that closed a factory in Virginia last year and opened a new one in Mexico while paying its CEO $2.1 million in total compensation.
- A clean-energy company in Cicero that told shareholders when it announced its $9.5 million loan that COVID-19 hadn’t harmed its business.
- Two companies that employ thousands of workers — well over the program’s usual 500-employee limit, though businesses also can qualify based on net worth or net income.
U.S. Treasury Secretary Steven Mnuchin said this past week that the rules that had allowed publicly traded corporations and other big companies to quickly deplete the initial $349 billion pot — shutting out many mom-and-pop operations — needed tightening. He warned publicly held companies that got more than $2 million through the coronavirus stimulus program that they would be audited. And he has asked large enterprises to voluntarily give back the money or possiblly face criminal charges if found to have cheated.
The U.S. Small Business Administration, which is overseeing the program, requires that “borrowers still must certify in good faith that their PPP loan request is necessary,” taking into account access to cash and credit. “For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith,” the Trump administration said April 23.
The SBA won’t disclose who got the bailout money. But some large national franchises have said they’ll give back the money they got after reports disclosed that. Among them: Potbelly, the Chicago-based sandwich giant.
The loans were part of a $2 trillion coronavirus-relief package Congress passed in March. In part, they were to cover fixed costs like rent and utilities, but the bulk of the money for companies under 500 workers was to keep people on the payroll. Another $321 billion has since been added to the program.
Illinois businesses, including the parent company of the Chicago Sun-Times, secured about 69,000 loans through April 16 totaling $15.9 billion, according to SBA data.
Eight publicly traded companies in Illinois have disclosed their participation. Altogether, they‘ve collected more than $38 million in the low-interest loans:
- FreightCar International, a Chicago manufacturer of rail cars, received the maximum $10 million on April 16. The president of the company, which has 496 employees, was in line in 2019 for $2.1 million in total compensation, including a $750,000 bonus, according to its filings with the federal Securities and Exchange Commission.
That same year, as it reported $229.9 million in revenue and a net loss of $75.2 million, the company closed a plant in Virginia, then leased a manufacturing facility in Mexico that’s set to open later this year. FreightCar also eliminated medical and vision insurance for retirees and their dependents as of Jan 1, telling shareholders that saved $6.6 million.
Company representatives didn’t respond to messages seeking comment.
- Broadwind Energy, a Cicero manufacturer of clean-energy equipment, received $9.5 million even as it reported earlier in April that it had $12.5 million in available credit and nearly as much in cash.
“We did not experience significant impacts from the novel coronavirus disease in the first quarter of 2020, in part, because our facilities currently operate as essential businesses,” the publicly traded company, which has 521 employees, reported in securities filings April 13.
Jason Bonfigt, Broadwind Energy’s vice president, said Friday that changed in recent weeks.
“Without the support of the PPP loan, there was a strong likelihood that we would have had to consider targeted cost reductions, including a reduction-in-force of valued staff,” Bonfigt said. “Broadwind met all of the requirements set forth by the U.S. treasury to apply for the PPP loan and did so in good faith, ensuring continued employment for our workers during a period of widespread economic uncertainty.”
- The SBA permits some businesses, such as restaurants, to treat each location as a separate entity. That allowed the Gibsons steakhouse chain in Chicago to get a loan.
“We applied for it and were fortunate to get some relief,” Gibsons chairman Stephen Lombardo III says, though he would not disclose how much money the company got.
Lombardo says that about 1,800 of Gibsons’ 2,000 workers have gone back to work at its 10 restaurants, which are offering takeout meals during the shutdown.
- SigmaTron International Inc. of Elk Grove Village, which has more than 3,106 employees worldwide, got $6.3 million on April 23, according to its federal filings.
Unknown: how many of those employees work at the company’s factories in Mexico, Vietnam and China.
Contributing: Frank Main