A Texas-based hotel empire begrudgingly pledged to return coronavirus aid for small businesses after the feds threatened to go after big companies that kept the money.
The Ashford Group of Companies slammed the Trump administration for shifting the rules of its $659 billion Paycheck Protection Program — as it announced plans to repay the loans it received by the feds’ Thursday deadline.
Ashford also hit back at criticism that it exploited “loopholes” in the law that it said Congress designed to help hotel firms survive the pandemic.
The group’s component companies — Ashford Inc., Ashford Hospitality Trust and Braemar Hotels & Resorts — applied for $126 million in so-called PPP loans through dozens of its individual hotels, which include Ritz Carlton and Renaissance properties.
“We are disappointed that, in an abundance of caution to avoid any risk of non-compliance with the changed PPP rules, our actions mean that our employees, vendors, communities and others in need will not benefit from the PPP as Congress intended,” Ashford Inc. CEO Monty Bennett said in a statement.
Ashford’s Saturday announcement marked a reversal from a week earlier, when the group said it would keep the funds, despite an outcry over big public companies getting loans while smaller firms were left out in the cold.
Treasury Secretary Steven Mnuchin praised the move.
“This money can now be allocated to Small Business,” he said on Twitter.
As that criticism mounted last month, the feds said public firms with “substantial market value” likely wouldn’t qualify for help and urge those that got loans to repay them by May 7. The Small Business Administration plans to review all loans larger than $2 million, and Mnuchin has said companies could face “criminal liability” for falsely claiming they needed the money.
But Ashford complained that the rules have changed almost daily since its companies submitted their loan applications “in full compliance” with the SBA’s initial guidance “and in the belief it was our obligation to protect our employees, vendors, communities, lenders and shareholders from unfair economic damage.”
Ashford also claimed its companies have limited access to capital markets and do not have “substantial” market value compared to other publicly traded firms. Ashford Inc.’s stock price has plunged about 66 percent this year to close at $7.90 on Friday, but the shares have been on a downward trend since September 2018, when they traded above $90.
Ashford companies also paid millions of dollars in dividends to “preferred” shareholders including Bennett and his father during the virus crisis while other investors got nothing, The Wall Street Journal has reported.