The federal Paycheck Protection Program just received another $310 billion in funding aiming to put small businesses on life support during the coronavirus pandemic. “The program ran out of the initial $349 billion the federal government earmarked for it in just 13 days,” noted Forbes.
In an online statement, Axios CEO and co-founder Jim VandeHei announced the website received just shy of $5 million in the first round of PPP funding.
“We have taken a financial hit like other small businesses. Our physical event business is gone until the crisis subsides, and some ad buyers are pulling back to measure the economic fallout. The media, broadly speaking, is getting crushed by the economic fallout,” VandeHei said.
“Along with quick moves we made early in the crisis to reduce non-personnel expenses, this loan ensures we can avoid layoffs and pay cuts for our almost 200-person staff for the rest of the year, regardless of how much the overall economy deteriorates,” he said.
Axios’s bailout is 99 percent larger than that for other large-scale companies. According to the Washington Free Beacon, Shake Shack has more than 6,000 employees and initially received $10 million from the PPP. It later promised to return the money after criticism that the large food company can withstand the economic pressure far better than mom ‘n pop businesses the funds have been sold to the public and Congress for. Axios received $5 million from taxpayers to cover the wages of fewer than 200 employees, or more than $25,000 per employee.
The digital news company already has a roster of billionaires generously backing it. Big name contributors include Boeing, Walmart, Pepsi, Comcast’s NBC News, and Laurene Powell Jobs, the widow of the late Steve Jobs.
On Sunday, the Treasury Department released a set of guidelines warning that large, publicly traded companies should not apply or qualify for an emergency loan from the PPP. These guidelines were released after the Trump administration advised large businesses not to apply for emergency coronavirus bailouts. Major companies — and several well-endowed universities — have faced major backlash for tapping the PPP fund.
In a LinkedIn post, Shake Shack CEO Randy Garutti announced the company would return its $10 million PPP loan.
“Shake Shack was fortunate last Friday to be able to access the additional capital we needed to ensure our long term stability through an equity transaction in the public markets. We’re thankful for that and we’ve decided to immediately return the entire $10 million PPP loan we received last week to the SBA so that those restaurants who need it most can get it now,” Garutti wrote.
Other large businesses followed in Shake Shack’s steps. On April 22, the salad franchise Sweetgreen announced it will return its $10 million loan. On the same day, Kura Sushi announced it will return its $6 million loan, and on April 23, Ruth’s Chris steak house announced it will return its $20 million loan.
The Treasury’s new guidelines are not legally binding. Large companies can still legally qualify and accept relief from the PPP.
While Axios is taking a $5 million government bailout, the 30 million small businesses applying for emergency loans are still waiting for checks. Of the 30 million businesses applying for the SBA’s PPP, approximately 550,000 loans have been approved. Only 1.8 percent of the nation’s small businesses have funding, while the other 98.2 percent wait and pray their family businesses won’t be devastated.
On April 28, VandeHei announced Axios would return the money after the closed on a deal for “an alternative source of capital.”
“Axios, which qualified for a federal Paycheck Protection Program loan to avoid layoffs, will return the money, after nearing a deal for an alternative source of capital,” VanedeHei wrote in a post on the site.