Trevor Milton, the CEO and founder of Nikola Motor Company, is defending his company’s receipt of $4.1 million from the Small Business Administration's (SBA’s) Paycheck Protection Program (PPP), according to CNBC.
While the program is touted by lawmakers and the White House as a lifeline to small- and medium-sized businesses (SMBs) and their workers, the Phoenix hybrid truck manufacturer is another example of a mega company that received the cash.
The startup, founded in 2014, merged in March with VectoIQ Acquisition Corp., a NASDAQ-listed publicly-traded acquisition company, and is valued at more than $3 billion, according to Trucks.com. The deal has not closed.
Thanks to the merger, Nikola will receive more than $500 million from investors including Fidelity and ValueAct Capital, the report said.
A Nikola spokeswoman declined a request for comment by PYMNTS and referred us to the company’s statement in the CNBC report.
“There’s a difference between a high valuation and having cash,” the statement said. “Nikola is a pre-revenue company with a lot of expenses and burn rate is high. Since PPP funds will be used to retain staff, the lifeline follows the spirit of the Act in that we’re preserving high paying jobs.”
Nikola said the PPP funds act as a cash bridge to retain its 300 employees while the VectoIQ merger closes.
Securities and Exchange Commission filings showed Nikola received the PPP funds from JPMorgan Chase.
CNBC reported the forgivable government loan comes months after the 38-year-old billionaire bought a 2,600-acre ranch in Utah for $32.5 million. The luxury property features a 16,800-square-foot river-front mansion with eight bedrooms, eight and a half bathrooms, a billiards room, movie theater, wine cellar and gym.
At the time, Milton said buying property is just the beginning.
“I plan on picking up multiple other properties like this one in order to preserve Utah and offer a sanctuary for my family, friends and others to enjoy,” he wrote in an email to the website Mansion Global, according to CNBC. “I feel like my generation is asset light, wants smaller everything and is moving to cities, which is the opposite of what I wanted in life.”
On Monday, Shake Shack founder Danny Meyer and CEO Randy Garutti said the company will return the $10 million PPP loan it received from the federal government that was part of the coronavirus stimulus package.
“We’ve decided to immediately return the entire $10 million PPP loan we received last week to the SBA so that those restaurants who need it most can get it now,” they said in a letter on LinkedIn.
Other big businesses that received PPP loans include Ruth’s Chris Steak House, Potbelly and the coal mine operator Hallador Energy.