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Quantum, a data storage company, is getting pressured by Congress to return its loan from the federal Payment Protection Program, however, the company is refusing to back down and announced it is keeping the money.
Last week a House panel asked five public companies, including Quantum, to return their loans immediately. All five companies received $10 million from the program. Quantum told CBS MoneyWatch they intend to respond to lawmakers but will be keeping the funding. They are required to explain in writing why they are still eligible for the PPP loan and submit supporting documents by Friday, May 15th.
Likewise, banks have come under criticism for prioritizing PPP loan approvals for larger companies rather than small businesses where they were intended to offer much-needed aid. The program offers low-interest, government-funded loans, targeting businesses with 500 or fewer employees. The best part is the loans can be forgiven if businesses keep their workers and use those funds towards payroll. Larger public companies have jumped on the opportunity while the local mom-and-pop shops are unable to receive the highly-sought after loans before funds run out.
The congressional committee wrote in a letter to Quantum that the company currently employs 800 workers and has the option to raise funds from investors. Quantum’s largest shareholder is B. Riley Capital Management, an investment fund valued at $500 million owning 21% of company shares. As of May 11th, Quantum’s market capitalization was $173 million.
In a statement by a Quantum spokesperson, the company said “Quantum believes it owes a duty to its American employees who would lose their jobs if Quantum returned its PPP loan to demonstrate why Quantum not only falls within the technical eligibility requirements of the PPP loan program, but also falls squarely within the spirit of what was intended by the [Coronavirus Aid, Relief and Economic Security Act].”
