Still, the draw-downs are a worrying trend, according to media reports. If many companies draw down on credit lines at once, it could pressure banks. Some private equity firms have told their portfolio companies to refrain from tapping loans for that reason.
Even less clear is the near-term outlook for small businesses that often lack big credit lines, but a $2.2 trillion federal stimulus plan approved by Congress Friday aims to help. The plan includes hundreds of millions of dollars in forgivable federal loans to small companies to pay workers, monthly rent, taxes, sick leave and family leave.
Lawmakers want companies to retain employees during the economic shutdown, said Tenley Carp, a business attorney at Arnall Golden Gregory. “The whole point is to avoid that exercise” of furloughing workers, she said.
Among big corporations, Macy's this month drew down $1.5 billion from a credit agreement with several banks, the entire amount available. The department-store chain, which on Monday said it will furlough the majority of its 130,000 workers, needs the money to "preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 outbreak," it said in a regulatory document.
Macy's operates 17 stores in metro Atlanta, although it has temporarily closed all its stores nationwide. Macy's also plans to open a $14 million high-tech development office in a new building in West Midtown, creating about 630 jobs.
Home Depot has also moved to shore up its financial footing. It has doubled the size of its commercial paper, a form of short-term borrowing, to $6 billion, and it obtained a new $3.5 billion credit facility.
Other Atlanta retailers have taken similar steps. Rent-to-own company Aaron’s withdrew $300 million this month. Furniture seller Havertys and discount clothing retailer Citi Trends each accessed about $44 million. Atlanta-area apparel makers have also tapped loans, including Carter’s and Oxford Industries, as shopping centers have closed.
Restaurant and hotel sales have been hammered as families have stopped eating out and canceled travel plans. Sysco, a food distributor that supplies restaurants, hospitals and schools throughout Atlanta, withdrew $1.6 billion from its $2 billion credit facilities.
“Sysco plans an important role in the food supply chain,” the company said in a Monday regulatory filing. “While in-location dining at restaurants in some areas is limited or closed, many restaurant customers remain open with drive-through, takeout and delivery service capabilities.”
InterContinental Hotels Group, the parent of Holiday Inn which maintains its North American headquarters in Dunwoody, filed notice to investors this month that it has access to a $1.4 billion credit line if the company needs it. Keith Barr, CEO of IHG, said on March 20 that demand for hotels was “at the lowest levels we’ve ever seen.”
AMC Entertainment, which operates 19 movie theaters in metro Atlanta, this month withdrew the entire $215 million available from a bank credit agreement, “in light of current uncertainty in the global markets resulting from the COVID-19 outbreak,” the company said in a regulatory filing.
Airlines also have accessed credit lines, though they're in line to receive $61 billion in financial backing from the federal stimulus package. Atlanta-based Delta Air Lines, which has cut flights and parked planes, drew down $3 billion and obtained a new $2.6 billion secured credit facility.