Public companies, under fire from small businesses for receiving Paycheck Protection Program loans, have more time to return them without penalty, federal officials said.
The loan repayment deadline is now May 14 instead of Thursday, according to SBA administrator Jovita Carranza. In a tweet, she said the new “safe harbor deadline” applies to public companies that sought PPP loans prior to April 24.
On April 23, Carranza and Treasury Secretary Steven Mnuchin advised public companies to return their loans or face “severe consequences.” They said the PPP is meant to help small businesses that cannot raise funds via a stock offering, though public companies aren’t prohibited from applying for the loans.
A public company in Hauppauge that secured a $3 million PPP loan announced plans on Wednesday to sell more stock.
Chembio Diagnostics Inc. said its “proposed public offering of an undetermined number of shares” will fund “the refocus of its business strategy” on making rapid tests for the coronavirus at plants in Hauppauge, Medford and Brazil. The company, which has 256 U.S. employees, has produced tests for HIV, syphilis, Zika, Ebola and other infectious diseases.
A Chembio spokesman didn’t immediately respond to a request for comment on Wednesday.
Separately, another public company in Hauppauge, Orbit International Inc., has secured a $1.6 million PPP loan.
CEO Mitchell Binder said, “This loan will allow us to maintain full employment” at the factory and office on Cabot Court and at a sales office in Florida. The company employs about 120 people, according to the financial information provider Dun & Bradstreet Corp.
The seller of electronics and software to industrial companies and the military is uncertain about future sales. But “with the receipt of the PPP loan, we are confident that once some sense of normalcy returns, our efficiencies will be restored, our operating performance will improve,” he said.
Orbit reported a profit of $463,000 last year on revenue of $26 million. It has a stock market value of $15 million.
Orbit is the 12th LI public company to secure a PPP loan. As a group, the dozen have won nearly $38 million to sustain more than 2,330 jobs.
Last week, hotdog purveyor Nathan's Famous Inc. disclosed receiving a $1.2 million PPP loan and said it would be returned.
The PPP consists of banks and other private lenders making loans of up to $10 million, generally 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.