SAN FRANCISCO (Reuters) - Three publicly traded companies overseen by Dallas hotelier Monty Bennett have borrowed $58.7 million under a program aimed at helping small businesses through the coronavirus pandemic, and that may be just a start.
“The Company anticipates receiving additional PPP Loans,” asset and hotel management company Ashford Inc. said on Wednesday as it reported the receipt of $12.8 million in Paycheck Protection Program loans for six of its subsidiaries.
Two real estate investment trusts advised by Ashford together won 50 other PPP loans totaling $45.9 million, Securities Exchange Commission filings earlier this week show. The total to the three companies was 285 times the $206,000 average loan size under the program, which is administered by the Small Business Administration.
Most of the loans were made by Key Bank, among the top five lenders in the $349 billion program.
More than 150 public companies borrowed more than $500 million under the program before it ran out of funds last week, a Reuters review of SEC filings shows. U.S. lawmakers are expected Thursday to approve an additional $320 billion to the program, and President Donald Trump is expected to quickly sign the bill into law.
The Treasury Department has faced criticism from Congress and small business groups for allocating too much of the funding to big, public businesses. On Thursday, Treasury changed its “Frequently Asked Questions” guidance about the program, saying “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.”
Two public companies that borrowed under the initial tranche, Shake Shack and Kura Sushi, returned their $10 million each after public outcry over big companies crowding out littler ones for the scarce funds.
The paycheck protection program was meant to help companies with 500 employees or fewer pay their employees, and loans are capped at $10 million. Bigger borrowers could get loans for more if they were split among locations with fewer than 500 employees. At least a dozen companies besides the Ashford group received loans of $10 million or more.
Ashford spokesman Jordan Jennings on Thursday said that Congress purposefully opened PPP to larger restaurant and hotel groups, many of which would not qualify for the Federal Reserve’s Main Street Lending Program designed for companies with more than 500 employees.
“I doubt Congress realized that by doing this they might be squeezing out smaller businesses under the PPP program,” he said in an email.
Of the new funds to be added to the program on Thursday, $60 billion has been set aside for loans through small banks and community development financial institutions in an effort to reach smaller companies.
Bennett defended his decision last month.
“My industry and our businesses are completely crushed,” Bennett wrote in March as Congress debated the $2.3 trillion economic rescue package, passed March 27, that included the small business bailout. “We should not be disqualified from assistance because we built our previously small businesses into bigger businesses.”
Bennett and his father, Ashford’s founder, own 16% of the company’s shares as well as convertible preferred stock that would confer 70% ownership.
The younger Bennett is Ashford’s CEO and chairman, and also chairs real estate investment trusts Ashford Hospitality and Braemar Hotels & Resorts Inc. Recipients of the loans obtained by the three companies were mostly hotels and included Ritz Carlton Atlanta, Renaissance Nashville, and Sheraton Anchorage.
Reporting by Ann Saphir; Editing by Heather Timmons and Diane Craft