A Tesla rival valued at $3billion received a multi-million dollar loan through the Paycheck Protection Program, a fund established by the White House and members of Congress as a lifeline to small businesses struggling through the coronavirus pandemic.
Nikola Motor Company, which was founded by billionaire Trevor Milton, received $4.1million through the PPP, despite owner Milton having set a Utah real estate record in 2019 for the purchase of a $32.5million ranch.
The federal loans were established for small businesses to pay employees and bills, but it has been revealed that huge multi-million dollar companies were among those that lined up for funds, leaving those it was intended for in the cold.
Nikola has argued that there is a ‘difference between high valuation and having cash’ and that it needed the loan to continue paying its 300 employees.
The company makes electric hydrogen-fuel cell vehicles and trucks and acts as a rival to Tesla from its base in Phoenix, Arizona.
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Nikola Motor Company was founded by billionaire Trevor Milton, 38, Used Semi Trucks who purchased a $32.5million ranch in Utah last year which broke the state’s real estate record
Milton having set a Utah real estate record for the purchase of a $32.5million ranch pictured
Nikola Motor company makes electric hydrogen-fuel cell vehicles and trucks and acts as a rival to Tesla from its base in Phoenix, Arizona. It was recently valued at $3billion in a merger deal
Milton, the company’s 38-year-old owner, was established as a billionaire recently as the business he set up in 2014 announced a deal to go public by merging with VectoIQ, a publicly traded shell company.
The merger valued Nikola at more than $3billion and placed Milton as a billionaire because of his stake in the company.
The deal has not yet closed but the Nikola was set to receive more than $500million in capital infusion from investors such as Fidelity and ValueAct Captial.
Milton also released in Match that Nikola had received a $800million truck order from Anheuser-Busch and ‘is about to announce orders many times that’.
Yet according to CNBC, SEC filings show that the company received $4.1 million in PPP funds from JP Morgan Chase to keep paying its employees.
‘There’s a difference between a high valuation and having cash,’ the company said in a statement.
‘Nikola is a pre-revenue company with a lot of expenses and burn rate is high,’ the company added.
‘Since PPP funds will be Used Semi Trucks to retain staff, the lifeline follows the spirit of the Act in that we’re preserving high paying jobs.’
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The loan comes despite its owner’s new billionaire status and just months after he paid out a massive $32.5million for a 2,600-acre luxury ranch in his native Utah.
The sale broke a record in the state as Milton revealed plans to buy even more property.
‘I plan on picking up multiple other properties like this one in order to preserve Utah and offer a sanctuary for my family, friends and others to enjoy,’ he told the Wall Street Journal.
Known as the Riverbed Ranch, Milton’s 2,670-acre property includes a 16,800-square-foot mansion along the Weber River.
Located about a 25-minute drive from Park City, the Utah has eight bedrooms and 8.5 bathrooms with floor-to-ceiling walnut bookcases.
The house even has its own helicopter pad.
Milton purchased this sprawling estate in 2019 and said he wished to buy more property
Known as the Riverbed Ranch, Milton’s 2,670-acre property includes a 16,800-square-foot eight-bed mansion that is built into the contours of the Weber River in Utah
The house has eight bedrooms and 8.5 bathrooms, as well as its own helicopter pad
The PPP was created by Congress and designed to loan money to small businesses with 500 employees or less to help them survive the economic downturn during the coronavirus crisis, ensuring they can still pay their employees and bills, and avoid mass layoffs.
Companies that use the money to avoid layoffs will not have to pay the money back.
However, multi-million dollar public companies in the U.S. have been lining up for the federal loans.
Research from Morgan Stanley shows that of the fund’s $349 billion, $243.4 million of the loans was allocated to at least 90 publicly traded companies, which could have gone to help around 1,100 smaller businesses, causing public outrage.
Due to loopholes in the conditions of the program, some large public companies with thousands of employees and easy access to credit were able to claim relief dollars through the scheme, depriving smaller businesses of tax-backed funds that could save them from going under.
Many of the public companies claiming loans thought the scheme have a market value of over $100 million, and some have claimed the maximum $10 million allowed through the scheme.
Public companies that have received funding from the PPP include metal working giant DMC Global, which has a $405 million market value, biotech company Wave Life Sciences ($286 million), biopharmaceutical company Mannkind ($273 million) and prefab home builder Legacy Housing ($229 million).
Table: Used Semi Trucks Some of the public companies, listed in order of their market value, who have recieved loans from the Paycheck Protection Program set up to help small businesses
Large restaurant chains were also able to claim benefits as they were exempt from the 500-employee cap if they have less than 500 workers per location.
Fiesta Restaurant Group, the parent company of the Pollo Tropical and Taco Cabana brands which employs more than 10,000 workers, claimed the maximum $10 million in loans.
Other large restaurants chains like Potbelly and Ruth’s Chris Steak House also secured the maximum $10 million.
According to the U.S. Small Business Administration, 4,400 of the approved loans exceeded $5 million when nationally the typical amount requested from the program was $206,000.