PPP loans to publicly traded corporations

[itellthefuture777]

Apr 21, 2020 9:47:43 GMT -5 liane said:

Don't know if there will be backlash, but MNKD is on this list:

www.cnbc.com/2020/04/21/large-public-companies-are-taking-small-businesses-payroll-loans.html

Mannkind is down what $3 billion.....not profitable..and deserve $5 million...or $3 billion..imo

[mnholdem]

I don't know specifically how the PPP is set up for small- or micro-cap companies that are publicly traded, but the deal the government made with the airlines provides the US Treasury warrants to buy up common stock. I just read an article this morning stating that the US taxpayer may soon become the second largest shareholder in several airline stocks (behind Berkshire Hathaway).  

[celo]

I would think when the money is reported on their corporate return the federal government may not allow it to be considered a refund. I think there will be a future time where the funds will either be considered a low interest loan or a grant by the IRS. Companies like Mannkind will probably only be entitled to a SBA loan at 1% interest rate due to the public backlash. Still good but not free money. These loans have a maturity date of 2 years. So by April 2022, it will all need to be paid back.

[pat]

MNKD using the PPP is a bit dubious. (I have a side business that got shut out of the first round myself). The ‘real intention’ of the program, arguably, is to aid those small businesses in the service industries that are getting hammered. Small hotels, restaurants, bars - not publicly traded pharmas. Of course, having said that, many of the folks that worked at those places are now collecting more in unemployment than they earned working there prior to the crisis, and have little motivation to return to work. My point is not to in anyway denigrate the unemployed. They are true casualties of this mess. But rather to highlight the unintended consequences of any government program. By definition, it will create inefficiencies in the market place - in this case capital one(s).

Mankind will use the $ for payroll and have it forgiven. I know we’re scheduled for 4 more capital raises this year, but maybe this will help to postpone one.

Yes, I’m being sarcastic.

[liane]

Apr 22, 2020 13:09:02 GMT -5 celo said:

I would think when the money is reported on their corporate return the federal government may not allow it to be considered a refund. I think there will be a future time where the funds will either be considered a low interest loan or a grant by the IRS. Companies like Mannkind will probably only be entitled to a SBA loan at 1% interest rate due to the public backlash. Still good but not free money. These loans have a maturity date of 2 years. So by April 2022, it will all need to be paid back.

If > 75% of the proceeds of the loan are used for payroll in the 8 weeks following loan disbursement, and the remainder is used for rent, mortgage interest, and/or utilities, then the loan can be forgiven.

[liane]

Apr 22, 2020 13:14:42 GMT -5 pat said:

MNKD using the PPP is a bit dubious. (I have a side business that got shut out of the first round myself). The ‘real intention’ of the program, arguably, is to aid those small businesses in the service industries that are getting hammered. Small hotels, restaurants, bars - not publicly traded pharmas. Of course, having said that, many of the folks that worked at those places are now collecting more in unemployment than they earned working there prior to the crisis, and have little motivation to return to work. My point is not to in anyway denigrate the unemployed. They are true casualties of this mess. But rather to highlight the unintended consequences of any government program. By definition, it will create inefficiencies in the market place - in this case capital one(s).

Mankind will use the $ for payroll and have it forgiven. I know we’re scheduled for 4 more capital raises this year, but maybe this will help to postpone one.

Yes, I’m being sarcastic.

If they refuse to come back to work, they will no longer qualify for unemployment.

[pat]

Apr 22, 2020 14:56:14 GMT -5 liane said:

Apr 22, 2020 13:14:42 GMT -5 pat said:

MNKD using the PPP is a bit dubious. (I have a side business that got shut out of the first round myself). The ‘real intention’ of the program, arguably, is to aid those small businesses in the service industries that are getting hammered. Small hotels, restaurants, bars - not publicly traded pharmas. Of course, having said that, many of the folks that worked at those places are now collecting more in unemployment than they earned working there prior to the crisis, and have little motivation to return to work. My point is not to in anyway denigrate the unemployed. They are true casualties of this mess. But rather to highlight the unintended consequences of any government program. By definition, it will create inefficiencies in the market place - in this case capital one(s).

Mankind will use the $ for payroll and have it forgiven. I know we’re scheduled for 4 more capital raises this year, but maybe this will help to postpone one.

Yes, I’m being sarcastic.

If they refuse to come back to work, they will no longer qualify for unemployment.

With all the extra “stuff”, it’ll all run out in August. Meaning restaurants and bars (in particular) are going to have a hard time re-opening before then.

[mango]

My parents own a small business and received the PPP Loan today.

👍

[mytakeonit]

I do a lot of money business ... do I qualify?

But, that's mytakeonit

[seanismorris]

Mentioning coronavirus pipeline gets you to the front of the line.

[harryx1]

[anderson]

Complaining that MNKD took PPP money is like Buffet complaining about paying lower tax rate than his secretary. Those are the government rules, you can either follow them like all your competition or shoot yourself in the foot and take the high road. People should place the blame squarely where it belongs, on congress for putting out bad guidelines for who qualifies for the loans, and not the companies who followed those guidelines to get the loans.

[celo]

I would anticipate this applies to Mannkind:

"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,” the SBA said.

[anderson]

MNKD probably still qualifies as a small business by SBA standards

www.sba.gov/document/support--table-size-standards

www.sba.gov/size-standards/

NAICS 325412 Pharmaceutical Preparation Manufacturing

Shake Shack, Ruth's Hospitality Group and Potbelly probably do not since the should be using NAICS 722513 Limited-Service Restaurants.

[mnkdfann]

Apr 23, 2020 10:51:59 GMT -5 celo said:

I would anticipate this applies to Mannkind:

"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,” the SBA said.

Here is the updated guidance, in case anyone wants to see the whole thing. In particular, the above is from Question 31. 

home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf


31. Question: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?

Answer: In addition to reviewing applicable affiliation rules to determine eligibility, 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. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, 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, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.

Lenders may rely on a borrower’s certification regarding the necessity of the loan request. 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.