300 companies that received virus relief funds have filed for bankruptcy
The government distributed $525B in PPP loans since April.
Billions of dollars shelled out to companies through the Paycheck Protection Program (PPP) wasn’t enough to sustain hundreds of businesses during the pandemic.
The Wall Street Journal conducted a deep dive into court filings and government data and discovered that 300 companies that received $500M in funding filed for bankruptcy.
According to the Small Business Administration, the government distributed $525B in loans since April to 5.2 million companies.
The companies employed about 23,400 workers but they say the loans and lack of stimulus relief were not enough to sustain their businesses. The publication took a look at the largest companies and found that those that went bankrupt received $228M to $509M. Half of those 285 firms have filed for bankruptcy since August. The businesses were located all around the country but the reasoning for filing was all the same. They say the pandemic damaged their businesses beyond the chance of recovery.
Hospitality businesses were especially impacted. The Hill cites Waterford Receptions, a wedding venue with two locations in Northern Virginia that reported a revenue reduction from $6M last year to only $567,000 this year.
The owner, Keith Clark, plans to file for personal bankruptcy and auction his home after guaranteeing a $1.5M loan from the SBA.
But while many businesses took a major hit during the pandemic, some PPP loan recipients took advantage. Back in November, theGrio reported that there were many were reports of fraud involving the loans.
Five people in Georgia, Ohio, and California obtained PPP loans for approximately $4M by making false claims about their small businesses’ overall expenses and payroll. The individuals failed to make payroll payments as indicated on their loan application which raised red flags.
Additional reporting by Ashley Terrell.
Have you subscribed to theGrio’s podcast “Dear Culture”? Download our newest episodes now!
TheGrio is now on Apple TV, Amazon Fire, and Roku. Download theGrio today!