From an office in Texas, Monty Bennett oversees a nationwide empire of more than 120 hotels -- from an Embassy Suites in midtown Manhattan to a Marriott in Beverly Hills, plus Ritz-Carlton resorts in Sarasota, Atlanta and Lake Tahoe, Calif.
More than 50 of his hotels and other corporate entities -- which are held in separate subsidiaries -- have qualified for $58.7 million in emergency “Paycheck Protection Program” loans that Congress set up to help the country’s smallest businesses hang on through the coronavirus pandemic, according to investor filings.
Hundreds of thousands of small businesses around the country have applied for the potentially forgivable PPP loans, though only a fraction of them received any aid before the program burned through its initial $350 billion in funding. Congress is expected to pass a bill Thursday that would plow $310 billion more into the program.
But the new legislation does not change a controversial provision of the program that has allowed a number of larger hotel and restaurant companies to claim multiple loans through the various subsidiaries and sidestep what some lawmakers say was supposed to be a $10 million-per-company cap.
At least eight hotel and restaurant companies have obtained more than one loan and more than $10 million through the Paycheck Protection Program, according to regulatory filings, press releases and news reports. Those companies have been approved for more than $140 million in loans, which they are unlikely to have to repay.
“If they [members of Congress] don’t change the terms of it, there’ll be more big companies who claim it,” said Betty Mekdeci, the executive director of Birth Defect Research for Children, an Orlando nonprofit that has applied for a $12,000 PPP loan but has yet to be approved.
“We just don’t have a team of MBAs and attorneys to figure out these things,” she added. “We just put in and hope for the best.”
Amid a growing national backlash, some large companies have backed away from the program. Shake Shack Inc., which initially obtained $10 million, said over the weekend that it would return the money. The decision came after the burger chain raised $150 million in a stock offering.
But others are unapologetic for taking the assistance. Bennett, the Texas hotelier, said in an email that his hotels will spend the $58.7 million in cumulative PPP loans that they obtained.
“We will use 75 percent or more of the funds to put our employees back to work -- the rest will be used for other critical operating expenses,” said Bennett, who is the chairman of the board of three intertwined hotel companies: a management company called Ashford Inc., and two real-estate investment trusts that own the hotels. Together, the three companies obtained 56 loans.
Bennett -- who was awarded more than $10 million in total compensation last year by his three companies, according to regulatory filings -- has pushed back hard against opponents of aid for big businesses in other forums.
“Is it preferable for a large business like Marriott to lay off hundreds of thousands of workers so we can say we helped only small businesses? Is it smart to let an industry icon like Hilton go bankrupt as long as we help a corner hotel?” Bennett wrote in a recent post on Medium. “We should not be disqualified from assistance because we built our previously small businesses into bigger businesses.”
The PPP loans are generally intended for businesses with no more than 500 employees, though the precise figure can vary by industry. But hotel and restaurant lobbyists persuaded Congress to include special rules allowing larger companies in their industries to qualify.
It’s not clear if many lawmakers understood what exactly they were voting on. The original PPP legislation was included in a much larger, $2 trillion economic rescue package that raced through Congress in a single week.
For instance, aides to Florida Republican U.S. Sen Marco Rubio -- who has been one of the biggest promoters of the PPP loans -- initially told the Wall Street Journal that restaurant and hotel companies wouldn’t be able to get more than $10 million per company.
But many have. The Dallas-based hotel companies that Bennett leads received 42 loans for $30.1 million, eight loans for $15.8 million, and six loans for $12.8 million, respectively -- and they expect to qualify for more.
Meritage Hospitality Group Inc., which owns more 300 Wendy’s fast-food franchises around the country, said it received $29.1 million through an unspecified number of PPP loans. Winter Park-based Ruth’s Hospitality Group Inc. received two loans totaling $20 million, and J. Alexander’s Holdings Inc., whose restaurants include J. Alexander’s, Stoney River Steakhouse and Redlands Grill, got two loans totaling $15.1 million.
In addition, the chief financial officer of Pebblebrook Hotel Trust, which owns 56 hotels around the country, told the Orlando Sentinel last week that the company had been approved for about 10 loans, though he did not say for how much. The chief executive of Fogo de Chao, a privately owned chain of Brazilian steakhouses that does approximately $325 million a year in sales, told the Wall Street Journal that the company got two loans for $20 million.
It’s possible some even larger hotel or restaurant companies may have pursued PPP loans, too. For instance, Hyatt Hotels Corp. amended the terms of a $1.5 billion credit revolver it has with Wells Fargo to allow the Chicago-based hotel giant to take on “loans provided by the U.S. Small Business Administration” through a COVID-19 stimulus program.
A spokeswoman for Hyatt, which turned a $766 million profit last year on sales of more than $5 billion, declined to say whether Hyatt has applied for or received any PPP loans.
After an avalanche of news coverage about large companies getting multiple loans, Rubio said on Twitter that the Paycheck Protection Program “was not intended to reach multiple subsidiaries of a national brand.”
The additional $310 billion in PPP funding that Congress is about to approve -- the legislation passed the Senate on Tuesday and is expected to pass the House of Representatives on Thursday -- sets aside $60 billion for smaller community banks and credit unions, in hopes that more of the money will reach businesses owners who don’t already have relationships with bigger banks. Some smaller businesses have accused bigger banks, which process the government-backed loans, of prioritizing larger clients.
But the bill does not make any changes to the special treatment for hotels and restaurants.
Rubio did not respond to requests for comment.
Doug Cole just hopes that he doesn’t get frozen out this time. Cole is the owner of LH Computer Services, a two-person data storage and IT services company in Coral Springs whose clients include schools and sports teams. Cole said his revenues have shriveled from more than $150,000 a month to less than $5,000 a month amid shelter-in-place orders and the indefinite cancellations of large group gatherings.
“My income has basically come to a screeching halt,” Cole said. “That’s why this PPP thing would be perfect.”
But Cole said he wasn’t able to get his PPP application -- for about $27,000 -- approved the first time around.
“And then to see the news that these big corporations that have posted millions and millions of dollars’ worth of profits are getting money -- I’m like, ‘Why is the little guy getting screwed out of it and the big guys who have money are getting all this money,’” Cole said.
[email protected]; @Jason_Garcia
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