Two local companies that received federal loans to weather the coronavirus pandemic have no plans to return the money, despite a recent directive from the feds.
The Treasury Department on Thursday said that the $349 billion Paycheck Protection Program (PPP) was designed to assist privately owned small businesses with fewer than 500 employees. Publicly traded companies have other ways to raise money and should repay the loans by May 7 or face scrutiny, the department said.
MiMedx in Marietta and Alimera Sciences in Alpharetta are considered among such companies.
The Treasury decision came after more than 100 publicly traded companies with huge stock market values and thousands of employees were discovered to have received the rescue loans.
Lawmakers on Friday approved a $320 billion expansion of the PPP program, after the first round ran out of money in two weeks. The loans can be forgiven after two years if borrowers use the proceeds for payroll, rent and other specific purposes.
More than 48,000 PPP loans were approved in Georgia, totaling $9.5 billion, according to the Small Business Administration. Among those were at least five publicly traded companies with Georgia operations or that are based here, according to regulatory documents. Companies aren’t required to disclose if they received a loan.
MiMedx, a Marietta company that makes skin grafts, said it won't return its $10 million loan. MiMedx obtained loan approval days after agreeing to pay $6.5 million to settle a federal probe into overcharging Veterans Administration hospitals.
“We are in compliance with the PPP program,” MiMedx said in an emailed statement. “For an essential business in healthcare, the funds are also essential.”
MiMedx stock is limited to a small trading market and is thus “unable to access the public markets” to raise money, the company said.
Former MiMedx CEO Parker “Pete” Petit was the finance chairman for President Donald Trump’s 2016 election campaign in Georgia. Petit has been indicted for securities fraud and has pleaded not guilty.
Alimera Sciences in Alpharetta won’t repay its $1.8 million loan by the May 7 deadline because of “limitations to our ability to access other sources of liquidity,” CEO Rick Eiswirth said in an emailed statement.
The funding is vital to Alimera’s ability to “serve physicians treating patients facing a loss of vision from diabetic macular edema,” Eiswirth said.
» COMPLETE COVERAGE: Coronavirus in Georgia
Three other companies that are based in Georgia or have significant Georgia-based operations also received relief loans.
AutoNation, the largest U.S. automobile dealer, obtained $77 million in relief loans, according to The Washington Post, far more than the $10 million cap. AutoNation surpassed the limit by applying through multiple dealerships. The company’s CEO said Friday it will return the money.
AutoNation operates 14 dealerships in Georgia, including Honda and Toyota dealers in Lithia Springs and a Volkswagen dealer in Buford.
A total of 10 hotels in Georgia got loans totaling $7.2 million through their sponsor company, Ashford Hospitality Trust. The largest loan, $3.4 million, went to the Ritz-Carlton Atlanta. Other Ashford-affiliated properties receiving loans include the W Hotel in Atlanta and Hyatt Regency in Savannah, which each got $1.5 million, and the Hotel Indigo in Atlanta, which received $263,000.
Ashford said in an emailed statement that it will not return the money. “The PPP program was specifically designed to help companies like ours as part of the national objective of shoring up businesses and getting people back to work,” the company said.
Perma-Fix Environmental Services in Atlanta, which manages nuclear waste, received a $5.7 million loan. It did not respond to a request for comment.