Large Hospitality Companies Are Using Small Business Loans To Pay Off Other Obligations Instead Of Its Employees

Back in March, Trump announced that the government would be distributing stimulus checks to individuals and families, as well as offering loans for companies specifically for large and small businesses amid the coronavirus. But, big businesses are swiping the loans they don’t necessarily qualify for. The Orlando Sentinel reports that a Pennsylvania investment firm that owns the Ritz-Carlton Coconut Grove in Miami has applied to about 48 taxpayer-backed loans under an emergency program that was created to help small businesses.

A Maryland hotel has also applied for more than 50 loans meant for small businesses despite making over $1.5 billion in revenue last year. So far, the company has been approved for about 10 of those 50 loans. Two small business loans went to Winter Park’s Ruth’s Hospitality Group Inc., a parent company of Ruth’s Chris Steak House, which made $42 million in profits in 2019. The Orlando Sentinel reported Winter Park’s spent $41 million buying back stock and paying dividends to shareholders. 

Congress set up a “Paycheck Protection Program” that was created to help financially assist small businesses, but around the country, several countries, hotel, and restaurant chains have been taking advantage of the $350 billion funds. Large and medium-sized hospitality companies have been using the excuse that their business has been particularity scarce because their locations have suffered widespread shutdowns across the country. 

Congressional leaders are currently discussing a new spending bill that would put another $250 billion or more into the protection program, which has now run out of money as of Thursday morning. The big companies reaping the benefits from the fund are asking that Congress go easier on what they can put their fund money towards – and for now, they don’t want one of those things to be their employees. Large businesses are asking to use their PPP loan on other expenses like mortgage principal or franchise fees that they pay to their parent or investment companies, and are requesting that less of the money go towards wages and workers, the outlet reports. 

Unions and other advocates for front-line workers say this is a way for big companies to finesse a system that was constructed to help people stay employed. “They want to make changes so that hotel owners can pay their debt off and pay their banks and their investors rather than actually put that money into the paychecks of workers. We are going to push back very hard on the industry to stop them making these kinds of changes and to push them to implement the program the way it was intended,” said Wendi Walsh, the secretary-treasurer of Unite Here Local 355, which represents hotel and casino workers in South Florida. 

However, big business owners and lobbyists argue that if they aren’t able to pay off their obligations to their parent companies, their employees won’t have a job to come back to. “If there’s no business for an employee to come back to, then those jobs will be lost forever,” said Chip Rogers, the president and CEO of the American Hotel & Lodging Association. “The actual survival for many of these business is being called into question right now.”