One of the biggest beneficiaries of the government’s small business lending program said on Saturday that its companies will return at least $70 million in loans received through the Paycheck Protection Program.
Ashford Inc., which oversees a tightly interwoven group of hotel and resorts, had seen its subsidiaries apply for $126 million in loans and the firm had previously said it planned to keep the money it received.
On Saturday, citing new guidelines from the Small Business Administration that restrict who can receive funding, the company said its firms will return the loans. The decision came after media outlets, including The New York Times, detailed how Ashford had benefited from a program intended to help small businesses struggling to keep workers on payroll amid the coronavirus pandemic.
The Trump administration had scrambled to tighten the program’s rules after it became clear that companies like Ashford, along with other publicly-traded firms, were benefiting from a $660 billion program.
Last week, Treasury Secretary Steven Mnuchin said companies had until May 7 to voluntarily return the funds and that firms could be held “criminally liable” if they did not meet the program’s criteria. He said the United States would audit any company that received more than $2 million in loans.
The huge amount of money Ashford and its related companies applied for — more than any other known company — caught lawmaker attention. Senator Chuck Schumer, Democrat of New York and the minority leader, had asked for an investigation into the company’s loans, and Joe Biden, the presumptive Democratic nominee for this year’s presidential race, wrote on Twitter that the firm should give the money back.
Ashford Inc. and related companies announced on Saturday that they would return the funds by the government’s May 7 deadline, saying the Small Business Administration’s rule changes, including one on April 30 that suggested that corporate groups should not have access to unlimited funding, had shaken their thinking about whether they qualified.
“While we believed then and continue to believe today that we qualify for P.P.P. loans based on the legislation and rule-making in place at the time our applications were submitted,” the company said in its statement, “continuous S.B.A. rule changes and evolving opinions by administration officials have led us to conclude that we may no longer qualify.”
The company was one of several large firms that drew public ire after receiving funding that was intended to help smaller companies — like dry cleaners, restaurants and nail salons — keep paying their employees amid the coronavirus-induced shutdowns. Ashford’s ability to receive money became a flash point in large part because the program quickly ran out of its initial $349 billion, drawing long backlogs of unfunded loans and leaving many tinier companies without relief. Congress has since allocated another $310 billion to the program but that money is also expected to be quickly depleted.
Ashford Inc. “could not have known that congressional appropriations for the program would be insufficient to cover the needs of all other businesses in the nation that have suffered similar harm,” it said in its statement.
Ashford is headed by Monty Bennett, a conservative who has donated heavily to Republicans, including supporting Mr. Trump’s 2016 campaign and directly providing more than $150,000 so far to his re-election bid. He had joined the broader hotel and restaurant industry in lobbying for a carve-out that allowed individual properties to apply for help if they employed fewer than 500 people “per physical location.”
For a time, he and his companies remained determined to hold onto the funding even as other businesses — like Shake Shack and the Los Angeles Lakers — announced that they would return the money. Mr. Bennett had complained that no other government relief was available for the hospitality industry, which has been hit hard by the virus as travelers cancel vacations and business trips.
“We call on Congress, the Treasury Department and the Federal Reserve to provide assistance to the hotel industry to protect jobs and asset values that have been severely impaired as a result of the pandemic and the government’s actions that have followed,” Mr. Bennett said in Ashford’s Saturday statement.
Mr. Bennett’s hospitality empire is one of several big companies that qualified for the program thanks to an intentional loophole that came after a lobbying push. Ashford pushed back on the idea that it was a “loophole” in its Saturday statement.
“Congress designed the P.P.P. to specifically allow companies that own multiple hotel properties to obtain separate loans for each property as a means to prevent the economic collapse of the hospitality industry,” it said.