In late June, Sharps Compliance, a Houston-based medical waste management company, reported spectacular financial results. The rollout of Covid-19 vaccines had increased demand for the company’s services, Sharps said, and its earnings had more than quadrupled. The company’s board granted Sharps’ top three executives twice the compensation they’d received a year earlier based on the performance; the trio shared almost $1 million more than they’d received in fiscal 2020, Securities and Exchange Commission filings show.
As publicly traded Sharps booked the enviable results, it also made a request of the federal government. Last year, the company had tapped taxpayers through a lender for a $2.2 million loan under the Paycheck Protection Program, or PPP, a relief operation for small businesses experiencing economic hardship due to coronavirus measures. A year later, Sharps wanted that loan forgiven.
On June 15, Sharps got its wish, regulatory filings show.
In the early, terrifying days of the pandemic, the federal government raced to support businesses and consumers undone by Covid shutdowns. A signature effort was the Paycheck Protection Program, a forgivable loan operation for small businesses. Overseen by the Small Business Administration, or SBA, it disbursed almost $800 billion in total from April 2020 to May 2021, when it ended.
Now, many PPP borrowers, like Sharps, are asking that their loans be forgiven. And as of Nov. 7, about $610 billion in forgiveness had been granted, data show.
For small businesses, PPP was “the lifeline they needed to survive during a once-in-generation economic crisis,” SBA Administrator Isabella Casillas Guzman said.
But an investigation by NBC News shows that the operations of some companies receiving loan forgiveness, like Sharps, seemed to thrive during Covid, rather than be hurt by it. And while those companies could not have predicted their standout results when they applied for PPP loans, their requests for loan forgiveness came well after the gains were evident.
Under the program, PPP loans can be forgiven if recipients maintain employee and compensation levels where they were before Covid and if at least 60 percent of the loan proceeds are spent on payroll costs and the rest on other eligible expenses, such as rent or utility payments.
There is no evidence that Sharps and the other companies identified by NBC News broke any laws or secured their loan forgiveness improperly.
A record year
When the government launched the PPP, few rules were in place; the idea was to get money to businesses fast. The government made it clear at the time that borrowers would be entitled to forgiveness if they met certain requirements.
Initially, borrowers did have to certify “in good faith” that the funding was necessary when they applied for loans, taking into account “their current business activity” and…
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