Chicago companies with COVID-19 SBA PPP loans include railcar maker FreightCar who paid CEO $ 2.1 million
In the face of the rapidly spreading coronavirus pandemic, President Donald Trump quickly rolled out the Paycheck Protection Program, aimed at keeping workers on the payroll at small businesses as business dwindled due to closures of COVID-19.
Among the Chicago-area businesses that benefited, according to the records, were:
- A railcar builder – who got the maximum of $ 10 million – who closed a plant in Virginia last year and opened a new one in Mexico while paying its CEO a total compensation of $ 2.1 million dollars.
- A clean energy company in Cicero that told its shareholders when announcing its $ 9.5 million loan that COVID-19 had not harmed its business.
- Two companies that employ thousands of workers – well beyond the program’s usual limit of 500 employees, although companies may also qualify based on equity or net income.
U.S. Treasury Secretary Steven Mnuchin said last week that the rules that allowed publicly traded companies and other large corporations to quickly deplete the initial $ 349 billion pot – excluding many mom-and-pop deals – needed to be tightened. He warned state-owned companies that raised more than $ 2 million from the coronavirus stimulus program that they would be audited. And he asked the big companies to return the money or face criminal charges if he turns out to have cheated.
The US Small Business Administration, which oversees the program, requires that “borrowers should always certify in good faith that their PPP loan application is necessary,” taking into account access to cash and credit. “For example, it is unlikely that a state-owned company with substantial market value and access to capital markets can make the required certification in good faith,” the Trump administration said on April 23.
The SBA will not disclose who got the bailout money. But some major national franchises have said they will return the money they got after reports revealed it. Among them: Potbelly, the Chicago-based sandwich giant.
The loans were part of a $ 2 trillion coronavirus relief package passed by Congress in March. Partly, they had to cover fixed costs like rent and utilities, but most of the money for companies with fewer than 500 workers was to keep people on the payroll. Since then, an additional $ 321 billion has been added to the program.
Illinois businesses, including the parent company of the Chicago Sun-Times, has secured about 69,000 loans through April 16 for a total of $ 15.9 billion, according to SBA data.
Eight Illinois-listed companies disclosed their stake. In total, they’ve raised over $ 38 million in low-interest loans:
- FreightCar International, a Chicago-based railcar builder, was awarded the maximum of $ 10 million on April 16. The president of the company, which has 496 employees, was online in 2019 for $ 2.1 million in total compensation, including $ 750,000 in bonuses, according to his filings with the Federal Securities and Exchange Commission.
That same year, when it reported $ 229.9 million in revenue and a net loss of $ 75.2 million, the company closed a plant in Virginia and then leased a manufacturing facility in Mexico that is slated to open. its doors later this year. FreightCar also cut medical and vision insurance for retirees and their dependents on January 1, telling shareholders they had saved $ 6.6 million.
Company representatives did not respond to messages seeking comment.
- Broadwind Energy, a Cicero maker of clean energy equipment, received $ 9.5 million even as it announced earlier in April that it had $ 12.5 million in credit available and almost as much cash.
“We did not experience significant impacts from the novel coronavirus disease in the first quarter of 2020, in part because our facilities are currently operating as critical businesses,” the publicly traded company said. company, which has 521 employees, said in securities deposits on April 13.
Jason Bonfigt, vice president of Broadwind Energy, said on Friday that had changed in recent weeks.
“Without the support of the PPP loan, there was a high probability that we should have considered targeted cost reductions, including downsizing of valuable staff,” Bonfigt said. “Broadwind has met all requirements set by the US Treasury to apply for the PPP loan and has done so in good faith, ensuring continued employment for our workers during a time of widespread economic uncertainty. ”
- The SBA allows some businesses, such as restaurants, to treat each location as a separate entity. This enabled the Gibsons steakhouse chain in Chicago to secure a loan.
“We requested it and were fortunate to get some relief,” Gibsons chairman Stephen Lombardo III said, although he did not disclose how much money the company had received.
Lombardo says about 1,800 of Gibsons 2,000 employees have returned to work at its 10 restaurants, which offer take-out during the shutdown.
- SigmaTron International Inc. of Elk Grove Village, which has more than 3,106 employees worldwide, raised $ 6.3 million on April 23, according to its federal deposits.
Unknown: How many of these employees work at the company’s factories in Mexico, Vietnam and China.
Contributing: Franck Main