A company employing the husband of Democrat U.S. Rep. Debbie Mucarsel-Powell — along with more than 10,000 other workers — is receiving $15 million under the Paycheck Protection Program (PPP), which went live earlier this month.
But the company now says it is reviewing whether to keep that money.
The PPP is designed to help small businesses — those with fewer than 500 employees — hold onto workers amid the economic slowdown caused by the novel coronavirus outbreak.
But a provision in the law is leading to larger companies dipping into the PPP pot.
Robert Powell works as Vice President in the legal department for Fiesta Restaurant Group. The organization is one of several publicly traded companies with a Florida presence to receive money under the program.
Fiesta is the parent company of Pollo Tropical, which has several locations throughout the state. Other restaurant companies with multiple Florida locations — such as J. Alexander’s and Potbelly — received loans of $10 million and upward as well. Ruth’s Chris Steak House, which is headquartered in Winter Park, received $20 million in loans.
Some concerns have been raised as to which firms are receiving that money.
According to a CNBC analysis, Fiesta is the eighth-largest individual company by market cap — valued at $189 million — to receive a loan under the program. It employed more than 10,000 workers as of the end of 2019. Fiesta is the largest publicly traded company by market cap to receive at least $10 million in relief.
But the company also received a second loan worth $5 million, according to a Securities and Exchange Commission filing.
The allocations raise questions about how a large company received money under a program reserved for those with fewer than 500 employees.
The legislation that set up the program permits companies with 500 employees per location to apply for a loan. That allowed several restaurant companies and hotel chains — whose employees are spread out among different locations — to access funding.
Thursday evening, the Miami Herald reported that Fiesta was “currently reviewing” whether to keep the $15 million. That’s after the Treasury Department released guidelines Thursday afternoon that large, publicly traded companies should not utilize the program.
Also on Thursday, Ruth’s Chris Steak House’s parent company, Ruth’s Hospitality Group, announced it was returning the $20 million it had received, NBC News reported.
“We intended to repay this loan in adherence with government guidelines, but as we learned more about the funding limitations of the program and the unintended impact, we have decided to accelerate that repayment,” Cheryl Henry, CEO of Ruth’s Hospitality Group, said in a statement.
Mucarsel-Powell, for her part, said she is against larger businesses pulling from the pool of PPP money.
“Congresswoman Mucarsel-Powell disagrees with the language that Republicans insisted be included in the law that allows larger companies to receive aid intended for smaller businesses,” a Mucarsel-Powell spokesperson said.
Her team cast blame on U.S. Sen. Marco Rubio and other Senate Republicans for their work on crafting the program.
“Unlike Sen. Rubio and the Republicans, Congresswoman Mucarsel-Powell has advocated for stronger language in future relief packages to prioritize small businesses. Today she is voting to direct an additional $60 billion in aid intended for small businesses, which are the heart of South Florida’s economy.
“Congresswoman Mucarsel-Powell has also called on Speaker Pelosi and Congress to add stricter provisions on PPP loans, which will direct banks to lend to all applicants, not only those with a pre-existing relationship, and to prioritize small businesses.”
Still, only a fraction of PPP money went to larger companies.
CNBC’s analysis cites a Morgan Stanley report showing that $243 million — out of a much larger $349 billion pot — has gone to publicly traded companies under the plan. That’s only around 0.07% of the available money overall.
Despite the small portion, the issue of those publicly traded companies requesting cash rose to the forefront when the program ran out of funds completely.
After that money dried up, Shake Shack — which also received $10 million under the act — agreed to return its loan money. Shake Shack is valued at more than $1.6 billion.
Firms like Fiesta and Potbelly are likely feeling the economic stranglehold of the virus. Though Fiesta made hundreds of millions in sales last year, they still posted a net loss of $84 million, and that was before the virus hit.
Potbelly Chief People Officer Matt Revord, meanwhile, has promised the money will go toward the PPP’s goal of keeping workers on the payroll.
“Every penny will be used to financially support the employees in our shops,” Revord said.
But the final destination of those funds does raise questions about what limitations should be installed for future money. According to Rubio, some 800,000 applications are still on hold because of depleted funds. Treasury Secretary Steve Mnuchin has threatened “consequences” for large companies who secured loans in violation of the law.
It’s not clear what those consequences might be, nor what constitutes a violation.
The U.S. House approved an additional $310 billion in PPP funds Thursday as part of a $484 billion spending package. The Senate on Tuesday approved the package, which also includes more money for coronavirus testing and for hospitals. President Donald Trump has said he will sign the bill.