Name: AutoNation, a retailer worth billions, says it received nearly $80 million in SBA funds
Brand: washingtonpost.com
SKU: washingtonpost-com-584
Availability: OnlineOnly

critic

AutoNation, a retailer worth billions, says it received nearly $80 million in SBA funds

preview

This article was published more than&nbsp;2 years agoCommentGift ShareAutoNation, a national network of auto sellers, received more than $77 million in federal small-business funds despite being a company worth billions that employed more than 26,000 people before the pandemic.In response to questions from The Washington Post, AutoNation Executive Vice President Marc Cannon said that the company’s board voted Thursday to return the funds even though the company had acquired them under the rules created by Congress and intended to use the money only to pay employees.The Post reviewed documents detailing the AutoNation loans and interviewed two employees of the business, who spoke on the condition of anonymity because they were not authorized by the company to discuss the matter.Documents show the company may have received even more money, a total of $95 million, spread across dozens of locations, an amount that would be more than triple the amount any company is known to have received through the fund. AutoNation disputes the $95 million figure.AdvertisementThe $3 billion firm, which is publicly held, had 26,000 employees in 18 states before the pandemic. AutoNation used separate tax identification numbers assigned to dozens of its more than 300 locations to apply for at least $266 million in funds for separate dealerships, including Jaguar and Land Rover of Bethesda, Porsche Orlando and Lexus of Cerritos, outside Los Angeles, according to the documents.While other large companies including restaurant chains Ruth’s Chris and Shake Shack have received funding from the SBA program, AutoNation stands out due to its size and value. Because the agency has refused to release data on which companies received loans and the amount of those loans, it’s impossible to know whether even larger companies received funding from the program.The $349 billion small-business-loan fund, called the Paycheck Protection Program, , leaving thousands of small businesses empty-handed.AdvertisementAutoNation executives compiled detailed spreadsheets of which dealerships had already applied, been approved and received the money. More than 81 locations received loan money, according to the documents reviewed by The Post. That included $4.6 million for an Audi dealership in Bellevue, Wash., and $2.7 million for a Toyota Mall location in Georgia.“The majority of our dealerships are able to apply for this,” said executive James J. Murphy on a call with employees last week, according to one of the employees on the call.Cannon said in a statement to The Post Friday that the company “was clearly eligible and applied on behalf of the 7,000 employees furloughed caused by the COVID-19 crisis.”“AutoNation intended to rehire all 7,000 associates under the PPP program as encouraged by the government and designed to get individuals back to work,” Cannon said. “From the beginning, AutoNation decided that all PPP funds would be used only for our employees and nothing else.”AdvertisementHe said that the board voted “to cancel all PPP applications and return all PPP funds by the safe harbor date of May 7th.” Later Friday Cannon said the money had been returned to the government. The loans were allowed because, under the $2 trillion Cares Act economic stimulus package, separate affiliates of a single corporation could apply independently for small-business funds. After hotel and restaurant chains received millions of dollars through the program, the Small Business Administration that larger, well-funded companies consider returning those loans by May 7.For the loans to be forgiven, 75 percent of the money must be used to pay employees. But two company employees said they took issue with AutoNation getting the money.“Small businesses don’t have investors or millions in cash and credit to weather this storm,” one of the company’s employees said. “AutoNation could have made it through without taking these loans out."AdvertisementThe employee said the loans are “an obscene amount for any company to take out of this fund that was intended to help keep our communities intact.” The funds were intended to go to companies with fewer than 500 employees that are unable to obtain credit elsewhere.Another employee, an AutoNation general manager, said it was “disappointing that a large publicly traded company can cloak itself in these different entities so it can reach out and grab these millions of dollars.”The general manager said that all the decision-making was made by executives: “None of us at the store level had any idea that we were applying for this money. That was all done at the corporate level."“That’s left these mom-and-pop retailers, restaurants, barbershops, day-care centers, so that they can’t get money because the swift attorneys at companies of our size can swoop in and get this money and they can’t. I just find it appalling. I don’t think that was the intent of the money,” the general manager said.The company has gone through leadership changes recently, with chief executive Cheryl Miller for reported health reasons earlier this month and being replaced by Chairman Mike Jackson until she returns. On Wednesday, AutoNation also named a new president, Jim Bender.AdvertisementSpokesmen for the Treasury Department and SBA did not return requests for comment. The administration has refused to release a list of companies that received loans under the PPP, but has said it provided funding to more than 1.6 million small businesses in all 50 states, with 74 percent of the loans for amounts under $150,000.On Thursday, the House a new $484 billion small-business-aid package, which the president is expected to sign.After the small-business program ran dry last week, the prompted chains including Shake Shack, Kura Sushi USA, Ruth’s Chris Steak House and Sweetgreen to . Executives said they had followed the program’s rules but returned the funds because their companies had access to other capital in ways that smaller businesses did not.Advertisement“I just hope we aren’t such a shameless company that we won’t do the same thing,” the AutoNation general manager said.While AutoNation has not disclosed its PPP loan in public filings, more than 80 publicly traded companies in an array of industries — including owners of large hotel chains, restaurant chains, energy firms and manufacturers — have reported receiving PPP money, Securities and Exchange Commission records show.Some of the companies are worth hundreds of millions of dollars based on their share values, and many of them pay executives seven-figure compensation packages. Others have boosted their share prices in recent years through share buybacks and dividend payments.Among those disclosures so far, one of the largest loans appears to be more than $30 million to The company owns more than 40 hotels including the Ritz Carlton Atlanta and numerous Marriott and Hilton properties, which each received loans ranging from $86,000 to $3.7 million.AdvertisementThe SBA’s original $349 billion program contained a vague requirement that businesses certify that “current economic uncertainty makes this loan request necessary.” The new guidance is more explicit and said companies that had other sources of cash probably would not qualify.“All borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application,” the guidance states. “Borrowers still must certify in good faith that their PPP loan request is necessary.”The guidance states that “it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith. … Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020, will be deemed by SBA to have made the required certification in good faith.”This story and headline have been updated to include a statement from AutoNation saying it received $77 million in funds, and to show that the company had 26,000 employees before the pandemic. It has furloughed 7,000 since then.Aaron Gregg contributed to this report.The latest: , a strategic shift that puts more of the onus on individuals, rather than on schools, businesses and other institutions, to limit viral spread.Variants: BA.5 is the most recent omicron subvariant, and it’s quickly become the dominant strain in the U.S. , and why vaccines may only offer limited protection.Vaccines: For people under 50, while the Biden administration works to roll out shots . Immunizations for became available this summer. Here’s by your prior infections and booster history.Guidance: CDC guidelines have been confusing — if you get covid, here’s . We’ve also created .Where do things stand? See the latest coronavirus numbers and . The is behind much of the recent spread.For the latest news, . CommentsGift ArticleTOP STORIESThe Culture of MediaSometimes the news is the story. Follow our team of columnists and reporters who write about the media.Try a different topic or to save your preferences

This article was published more than&nbsp;2 years agoCommentGift ShareAutoNation, a national network of auto sellers, received more than $77 million in federal small-business funds despite being a company worth billions that employed more than 26,000 people before the pandemic.In response to questions from The Washington Post, AutoNation Executive Vice President Marc Cannon said that the company’s board voted Thursday to return the funds even though the company had acquired them under the rules created by Congress and intended to use the money only to pay employees.The Post reviewed...

AutoNation, a retailer worth billions, says it received nearly $80 million in SBA funds

No article scores yet.

CRITIC REVIEWS

PUBLIC REVIEWS