Quantum, Told To Return PPP Loan, Maintains It's “Saving American Jobs”
"This PPP loan is saving American jobs at Quantum -- without it we would most certainly be forced to reduce headcount. We owe it to our employees who’ve stuck with us through a long and difficult turnaround," a Quantum spokesperson said.
Storage technology vendor Quantum is on a list of five companies being ordered to immediately return a loan it received as part of the Payroll Protection Package.
In addition to Quantum, the U.S. House of Representatives Select Subcommittee on the Coronavirus Crisis Friday also requested that Payroll Protection Package loans be returned by Peoria, Ariz.-based transportation services company EVO Transportation; Gulf Island Fabrication, a Houston, Texas-based construction services provider; MiMedx Group, a Marietta, Ga.-based biomedical company; and Universal Stainless & Alloy Products, a Bridgeville, Penn.-based steel products manufacturer.
The Select Subcommittee Friday sent a letter to the five companies demanding that they either confirm by Monday, May 11, that they will return the loans they received from the Payroll Protection Package, or PPP, or provide documentation related to their PPP loan application.
The request for return of the loans or detailed documentations about the loans was being made to public companies with market capitalizations of over $25 million, have more than 600 employees, and who received “small business” loans of $10 million or more, the Select Subcommittee said in a statement.
The Select Subcommittee’s goal is to recoup the money loaned to such companies and make it available to smaller businesses that were unable to access the PPP loans.
"Returning these funds will allow truly small businesses—which do not have access to alternative sources of capital—to obtain the emergency loans they need to avoid layoffs, stay in business, and weather the economic disruption caused by the coronavirus crisis," the Select Subcommittee said in the statement.
The U.S. House of Representatives Select Subcommittee on the Coronavirus Crisis on Friday also released the letters written to the five companies.
In its letter to Quantum CEO Jamie Lerner and signed by seven U.S. Representatives, the Select Subcommittee wrote that the Coronavirus Aid, Relief, and Economic Security (CARES) Act was intended to provide a lifeline for small businesses that otherwise might be forced to lay off employees or shut down entirely, and was not intended to be used by large corporations that have a substantial investor base and access to capital markets.
The Select Subcommittee wrote that Quantum, which received a PPP loan of $10 million, had 800 employees and a market capitalization of over $150 million.
"Since your company is a public entity with a substantial investor base and access to capital markets, we ask that you return these funds immediately. Returning these funds will allow truly small businesses—which do not have access to alternative sources of capital—to obtain the emergency loans they need to avoid layoffs, stay in business, and weather the economic disruption caused by the coronavirus crisis," the Select Subcommittee wrote.
Quantum, in a statement from a company spokesperson emailed to CRN on Sunday, wrote that the company recently received the letter, will be responding and is looking forward to engaging with the committee.
"Quantum believes it owes a duty to its American employees who would lose their jobs if Quantum returned its PPP loan [and plans] to demonstrate why Quantum not only falls within the technical eligibility requirements of the PPP loan program, but also falls squarely within the spirit of what was intended by the Cares Act.
"This PPP loan is saving American jobs at Quantum -- without it we would most certainly be forced to reduce headcount. We owe it to our employees – who’ve stuck with us through a long and difficult turnaround – to do everything we can to save their jobs during this crisis," the spokesperson wrote.
A number of large public companies have come under fire for applying for loans from the PPP, part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted by Congress to help bring financial relief in the midst of the coronavirus pandemic. At least 94 publicly traded companies disclosed that they received aid via the PPP, some with valuations over $100 million, according to the Associated Press. Several of those companies have already repaid or plan to repay those loans.
The PPP, administered by the Small Business Administration, originally made available $350 billion for low-interest loans primarily meant to help small businesses cover the costs of keeping employees on staff. The loans may be forgiven if businesses adhere to the program’s guidelines on how and when to utilize the money.
However, that program ran out of money within two weeks as it was overwhelmed by the number of businesses applying for relief. A second round of $310 billion in funding for new loans was approved in late April.