Some Very Small Businesses Got Large Paycheck Protection Loans

Advanzeon Solutions, a Florida-based company that provides sleep apnea treatments through a network of physicians and clinics, is a small business by definition: it has only two full-time employees, according to regulatory documents. At the end of April, Advanzeon obtained a loan from the Federal Paycheck Protection Program for just over $ 1.2 million, or $ 621,900 per employee.

This money would do more than just protect Advanzeon’s payroll. The $ 1.2 million loan is more than double what the company spent on all of its salary costs in 2019, including benefits and independent contractors, according to a file.

NTN Buzztime is another small business getting great relief from a PPP loan. Based in Carlsbad, California, Buzztime provides entertainment displays and other tabletop technology to restaurants. He received a $ 1.6 million PPP loan on April 18.

Buzztime said it had 73 employees at the end of last year, but after two recent rounds of layoffs, its workforce has fallen to 17, according to a Securities and Exchange Commission file.

The result: Buzztime received enough government assistance through the P3 to pay its remaining employees $ 72,000 each for the two-month funding period covered by the loan. This is the annual equivalent of $ 432,000 per worker.

Neither company returned CBS MoneyWatch’s request for comment for this story. There is no allegation of illegality associated with any of the companies’ PPP loans. And under the program’s restrictive spending rules, no business would be able to afford the nearly hundreds of thousands of dollars it received per employee.

Advanzeon and Buzztime are among nearly 90 companies that have received more PPP money than they can spend under the program’s rules, based on a CBS MoneyWatch analysis of public company deposits.

The $ 660 billion low interest loan program was designed to keep millions of small business workers on payroll and unemployed during the worst of times. coronavirus pandemic. Under current rules, at least 75% of a company’s PPP loan must be spent on employee compensation and benefits, with a cap of $ 100,000 in annual compensation per employee. The money also has to be spent over eight weeks for the loan to be canceled. This comes down to a maximum of almost $ 21,000 per employee over eight weeks, before health insurance costs and other benefits.

Banks collect PPP fees


More than 350 publicly traded companies said they had secured a total of nearly $ 1.2 billion in PPP loans. Some have since returned the money amid a backlash against large companies with access to capital markets by tapping into a bailout fund aimed at Main Street businesses. But that’s only a small fraction of the roughly 32,000 PPP loans of $ 2 million or more, which total about $ 125 billion, or nearly 20% of the relief money for the entire program.

The Small Business Administration said in a joint statement with the Treasury Department earlier this month that it “would review all loans over $ 2 million, in addition to other loans, if any, as a result. the submission by the lender of the borrower’s loan forgiveness request “. The Treasury Department’s deadline for companies to repay loans without penalty was May 18.

Some small business banking experts expect the Treasury Department to announce changes to the program that could reduce the share of P3 loans that businesses must use to pay employees, compared to other large business expenses like the rent. The government is also widely expected to give businesses more time to use their P3s loans amid complaints from many small businesses that the eight-week window is too restrictive as deadlocks persist and potential customers sit on the sidelines.

The program allows businesses to obtain a 1% government guaranteed loan. Businesses can borrow up to 2.5 times their monthly payroll, including benefits. Its main objective is to help companies with 500 employees or less to cover their personnel costs for two months.

Advanzeon, the sleep apnea company, had reported payroll and related costs for all of 2019 of $ 512,844, or about $ 43,000 per month. On that basis, the company would be eligible for $ 107,000 in Paycheck funds. Instead, he got nearly 12 times that amount – enough to cover his monthly payroll for more than two years, on a loan from Mechanics Bank in San Francisco.

At Buzztime, covering the estimated salary costs of 17 employees for about eight weeks would have come to around $ 430,000, according to a small business financial advisor who prepared dozens of P3 loan applications for clients. (The advisor asked CBS News to remain anonymous in exchange for sharing his ideas.) Buzztime got three times that amount thanks to a loan from Farmington, Mich., Based Bank Level One.

PPP loans put some workers in a difficult position


The scale of the federal loan program – which rushed to distribute $ 660 billion to millions of small businesses in just over a month – has created confusion for banks and businesses. Erik Asgeirsson, president and CEO of, told CBS News that many companies applied before the rules for the Paycheck program were firmly established.

In the rush to access SBA funds, companies of all sizes tried to get all the money they could under the rules.

“Everyone is aware that there are going to be reviews of how these programs have worked. It always happens,” said Asgeirsson. “You can go back to the disaster relief programs under Hurricane Sandy, you can go back to the TARP program [during the financial crisis]. So people should be prepared to explain why they applied for a loan. “

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