2 more LI public companies receive PPP loans to pay workers

Two more public companies on Long Island have secured controversial Paycheck Protection Program loans, but one has already returned the money.

In all, 15 local public companies were granted $45 million in PPP loans, with four companies returning a combined $14 million, according to securities filings.

Small business owners facing cash shortfalls due to the coronavirus pandemic and shutdown of nonessential activity have complained that the PPP was meant to help them, not public companies that could raise funds by selling stock. 

Combined, the local loan funds will pay the wages of 1,800 employees at the public companies over eight weeks. 

The new loan recipients are defense contractor Air Industries Group and MRI manufacturer Fonar Corp. Fonar announced it has returned its loan. 

Air Industries, with headquarters in Bay Shore, secured a $2.4 million PPP loan to fund two months of payroll for 159 employees. The company produces parts for military and civilian airplanes.

“The coronavirus has severely impacted the commercial aerospace industry,” CEO Lou Melluzzo said last week. “We have seen reductions in orders from our commercial customers, but defense remains strong. We are currently accelerating production of military products to offset reductions in commercial orders,” he said.

Air Industries reported a loss of $2.7 million last year on sales of $54.5 million. It has a stock market value of $32 million.

Fonar, based in Melville, received a $5 million PPP loan on April 20 to pay the wages of 500 employees for eight weeks. Less than two weeks later, the company returned the loan, citing pressure from federal officials who said the PPP isn’t meant for public companies, though they aren’t barred from securing loans. The officials were responding to criticism from small business owners who haven’t received loans.

“Due to an abundance of caution, on May 1, we returned the full amount of the loan, since it became increasingly unclear whether or not public companies would be required to seek other sources of liquidity,” Fonar said in a securities filing.

The company reported a profit of $20.5 million last year on revenue of $87 million. It has a stock market value of $138 million.

Besides Fonar, three other local companies have returned PPP loans: test maker Chembio Diagnostics Inc. in Hauppauge, defense contractor Frequency Electronics Inc. in Uniondale and hotdog purveyor Nathan’s Famous Inc. in Jericho.

Last week, the U.S. Small Business Administration and Department of the Treasury dropped an earlier threat to prosecute public companies that falsely claimed PPP loans were their only financing option during the coronavirus outbreak.

Banks and other private lenders have made $1.3 billion in PPP loans to 419 public companies as of Monday. That equals about 0.2% of the $544 billion in PPP loans, which are guaranteed by the federal government, according to data from FactSquared in Washington and the SBA.

Paycheck Protection Program loans are for up to $10 million per applicant and generally go to businesses with 500 or fewer employees. The interest rate is 1% with a two-year term, and the entire amount is forgivable in some instances. Newsday has secured a $10 million PPP loan.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.