Cutera, a California-based beauty device maker, was among the recipients of the Paycheck Protection Program (PPP) despite being worth $26.7 million in stock sales just in April of this year while the pandemic was ongoing.
That didn’t stop the company, partially run by hedge fund manager Daniel Plants, from taking the $7.1 million from the program intended to boost small businesses who can’t make money due to the pandemic-related nationwide shutdowns.
Cutera wasn’t alone — according to CNBC, there were several large businesses that traded stocks and made money even during the pandemic and also applied successfully for PPP funds.
There was medical device maker Misonix, which got $5.2 million from the PPP despite having a net stock value of $34.6 million from a January trade. Healthy drink company New Age Beverages took $6.9 million — the company reported net proceeds of $7.4 million in April 2020 through an ongoing agreement.
Treasury Secretary Steven Mnuchin has warned of “severe consequences” for companies taking the PPP funds that don’t need them. And there’s a deadline of May 14 for companies to return funds they didn’t need with amnesty.
CNBC reported that there are 346 public companies that are keeping the PPP loans despite access to other sources of funding. Some public firms, such as Shake Shack and Ruth’s Chris Steakhouse, returned the loans in April.
CNBC said 49 of the public companies keeping the loans, including the three aforementioned ones, had market capitalizations of at least $100,000 and nevertheless applied for and accepted PPP loans, and have no plans to return the money that have been discussed publicly as of this week. Many of them had idle credit lines they could’ve tapped into or stock they could have sold.
The Small Business Administration (SBA) came under fire for the PPP’s inefficiencies in April as it was almost instantly revealed that many large corporations took large chunks of the $349 billion allotted for the program. The SBA responded by saying the following round of PPP funding would come with stricter provisions against those large companies taking money, and that they’d be deemed ineligible next time.
The latest FAQs for the PPP state that accepted funds below $2 million are generally assumed to be legitimate and not from borrowers with access to previous stockpiled funding.