A group of listed Dallas hotel companies, described as the biggest beneficiary of the paycheck protection program, said it was keeping $ 126 million in loans for coronavirus-related hardship to help recover its thousands of dollars. employees at work.
In one detailed score in 26 points Posted on its website, Ashford Inc. said the criticisms were “unwarranted” about hotel companies getting forgivable loans from the government’s effort to save small businesses suffering from the COVID-19 pandemic.
Ashford’s pullback comes as the program prepares to open the loan window on Monday for the second time following a first round that saw state-owned companies claim millions in low-interest loans.
“The COVID-19 outbreak has been devastating for our business and our employees,” according to Ashford’s post. “We have been in the hospitality business for decades and have never experienced anything so destructive to our industry. The impact is greater than September 11 and the 2008 financial crisis combined.
Ashford and two real estate investment trusts she advises, Ashford Hospitality Trust and Braemar Hotels & Resorts, collectively requested $ 126 million for 130 luxury hotels and resorts across the country which employed 14,000 people.
All three are managed by Dallas hotelier Monty J. Bennett. The companies achieved combined sales of $ 2.2 billion last year. They applied for PPP loans for every hotel location with 500 or fewer employees.
Businesses disclosed earlier receiving $ 58.7 million in loans for branded hotels with some of the biggest names in the industry, such as Hilton, Hyatt, Marriott and Westin. In the new regulatory documents on Friday, the companies reported millions of additional loans approved.
Small business owners excluded from the program’s initial $ 349 billion loan cycle have sharply criticized state-owned companies that dip into the cash, arguing that these companies have other means of accessing capital to survive the crisis . Congress invested an additional $ 320 billion in the program last week, with loans set to resume on Monday.
Public companies such as AutoNation, Landry’s, Ruth’s Chris and Shake Shack have since returned over $ 170 million on the agenda, suggesting they didn’t know their loans would prevent small businesses from getting help. The US Small Business Administration has issued new guidelines requiring large businesses to repay the money by May 7 if they have other sources of funding.
Ashford said the loans he received are “crucial to stabilizing our business, and they represent a significant part of our (now much less valuable) businesses.”
“We plan to keep all funds received under the PPP,” the company said. “Total PPP funding for the hospitality industry is less than 3% of the fund’s initial budget … Our businesses haven’t stopped small businesses from receiving funds. “
Hotel companies have not been able to apply for assistance under the CARES Act’s separate Main Street Lending program due to the way hotels are funded in the United States, according to the company. This meant he had to rely on PPP for help.
Ashford statement says companies have laid off or laid off 90% of their workforce, closed 32 of 130 hotels, cut executive compensation and operating expenses and halt first quarter dividend payments to some shareholders trusts.
On Monday, the SBA will resume processing loan applications at 9:30 a.m. CT. He encouraged lenders to process claims previously deemed eligible.
The initial launch of the program was difficult, after guidelines for lenders to process loans were only issued the day before, and some large banks either did not participate initially or only accepted applications from clients with existing loan accounts. The SBA processing system was sometimes inaccessible due to the volume of requests.
Questions arise as to the fluidity of the restart of the program, as some banks continued to accept applications after the SBA stopped accepting them, and the big banks are ready to flood the SBA with these and others that were not dealt with in the first round.
A Dallas business owner was kicked out in the first round, said she would try to work with a small bank.
Susan Saffron, whose jewelry business has been operating on Lovers Lane for 10 years, applied in the first round through JPMorgan Chase, one of the program’s biggest lenders. She said her branch manager changes often and she has struggled to establish a relationship.
“I’m just a million people at Chase,” said Saffron, whose sales have fallen 80% since she closed her door on March 16. “I will be moving to a small bank. I am loyal and have been dealing with them for a long time.
Saffron said she was angry when big companies quickly got big loans. After talking to other small business owners, she realized that people like her were successful in small banks.
At Preston Center Plaza, pet store owner Marsha Lindsey requested a $ 34,000 loan from the Bank of America to keep her employees working at Lucky Dog Barkery. She received an email on Thursday informing her that her application was complete, but pending funds.
She paid her April rent and her salespeople, which are also small businesses.
“I’m not strapped for cash, but you have to be wondering what the priorities are here,” Lindsey said. “It’s not like mine is a $ 10 million loan.”
Other small business owners have gone to court. In a lawsuit filed last week in Dallas County, two companies accused banking giant JPMorgan Chase of ignoring them in order to help larger clients.
Starwalk of Dallas LLC, a party rental company, and Kona-Wood Houston LLC, a snow cone company, allege in the class action lawsuit that Chase assured small business owners it would help them, but s ‘is rather focused on “selected and larger customers.” companies. “
Starwalk and Kona-Wood applied for P3 funding online through Chase’s website. The companies said Chase never informed them of the approval of their applications.
“Chase Bank has chosen from among its larger ‘small businesses’ to prioritize and process their loans at the expense of its other small business clients,” the lawsuit said.
Chase had not filed a response to the lawsuit Friday afternoon. Chase said he funded $ 14 billion in loans in the program’s first round, with a backlog totaling $ 26 billion before funds ran out.
Bloomberg also contributed to this story.