The Los Angeles Lakers have returned a small business loan worth approximately $4.6 million. The money was provided as part of a federal government focused on supporting small businesses impacted by the COVID-19 outbreak. The Lakers had originally applied for the loan through the Small Business Administration's Paycheck Protection Program but returned the money after learning that hundreds of thousands of small businesses were shut out.
The program was established as part of the $2.2 trillion CARES Act and was launched on April 3. Small businesses were provided with the opportunity to apply for and receive loans to cover employee salaries and other expenses. The loan is forgivable provided 75 percent of the funds are spent on payroll and that none of the employees are fired. The Lakers were eligible for the loan due to having roughly 300 employees.
"The Lakers qualified for and received a loan under the Payroll Protection Program," the Lakers told ESPN in a statement. "Once we found out the funds from the program had been depleted, we repaid the loan so that financial support would be directed to those most in need. The Lakers remain completely committed to supporting both our employees and our community."
According to ESPN, the team's value was estimated to be more than $4 billion prior to the coronavirus pandemic. As a team in Los Angeles, the Lakers have a broadcast deal that generates more than $150 million in annual revenue, the most lucrative in the NBA. The Los Angeles Lakers also have three billionaire minority owners in Philip Anschutz, Patrick Soon-Shiong and Ed Roski Jr.
In addition to the Lakers, Shake Shack and Auto Nation both announced that they would be returning their small business loans. The specialty burger chain received a $10 million loan but announced on April 17 that the company would be furloughing 1,000 employees. AutoNation, a Fortune 500 auto retailer, received $77 million from the program and had intended to use all of the money for payroll but opted to return it after a board meeting.
The SBA issued new guidance in anticipation of the second round of PPP funding. Wealthier companies that have access to liquidity and credit markets are discouraged from applying during this funding. The Lakers are considered to be among this group due to having access to the NBA's credit facility program that has since been extended to $1.2 billion.