The point of the Paycheck Protection Program (PPP/) was to keep small companies afloat during this crisis. With no clear end to the virus in sight, many small businesses were in danger of having to close their doors permanently. For some, the PPP was their lifeline. As the loan was backed by the government and forgivable, this made it all the more attractive to those businesses otherwise just struggling to get by. So how in the world did the L.A. Lakers manage to get a 4.6 million loan via this small business bailout program? A franchise like the Lakers doesn't exactly fall into the category of struggling small businesses.
Treasury Secretary Steven Mnuchin was even shocked by the fact that the basketball organization was given such a large loan under the PPP. Currently valued at over four billion dollars, the Lakers organization did in fact apply for and receive money through the government's relief fund program. Needless to say, many (even fans/) spoke up in light of the amount the team received—or that they received any money at all under the PPP. Facing backlash, the LA Lakers did end up returning the funds. A spokesperson for the Lakers said the decision to return the money was made as soon as they found out PPP funds were depleted.
The question thus stands though…How did the Lakers end up qualifying for a loan program geared to help small businesses in a time of crisis? The criteria for qualification under the PPP includes the following:
- The small business has to meet certain SBA size standards.
- Any non-profit, veterans organization or tribal business with the greater of 500 employees or that meets the SBA size standards.
- A business with a NAICS code that starts with 72, has more than 1 physical location, and employs less than five hundred per location.
- Sole proprietors, independent contractors, and self-employed persons.
That said, the Lakers though a basketball team first and foremost, do have a staff of roughly 300 workers. This, therefore, made them technically eligible under the above-stated guidelines. Since this debacle, the Treasury Department has issued the further guideline that any company applying for a PPP loan has to do so in good faith, that the loan was necessary for their business. And consequently, they could not access other forms of funding to make it through this crisis. The Lakers were not the only large company to be given a loan; stories regarding Shake Shack and Ruth Chris's for example evoked similar public outcries as this was a major reason the program in the first phase ran out of cash.
At First Union Lending, we are here to help small companies who may be struggling. We know that in some regions, businesses have been slower to reopen thereby causing financial strain. If you need a PPP loan, there is still money available. We can help you access the cash you need during this challenging time. Call today!