Bedford-based Legacy Housing Corp., a publicly traded company that builds and sells mini-homes and manufactured homes, has paid off its $ 6.5 million loan from the government’s small business bailout program.
CEO Kenny Shipley said the company made the “difficult decision to return the funds” based on new US Small Business Administration guidelines that require companies to return the money if they have other sources of capital. .
The Paycheque Protection Program has been touted as a way for small businesses to keep workers on their payroll while recovering from the economic pain resulting from the COVID-19 pandemic.
“Legacy Housing is a micro-capitalized public company that sought P3 funds for very simple reasons – we wanted to make sure that our operations would continue to provide affordable housing, maintain our payroll and keep our employees,” he said. Shipley said in a statement. .
The company, which had a record revenue of $ 168.9 million last year, said he laid off workers, lowered the prices of his products, and slashed the wages and salaries of executives across the company before turning to the SBA-administered program for help. Its profit in 2019 was $ 28.8 million, an increase of 34% from the previous year.
The coronavirus crisis has slashed retail sales for Legacy, forcing the company to slow production, offer discounts on homes, and reduce down payment requirements. Her typical client has an annual family income of $ 60,000 or less.
“We can only hope that these funds will be distributed to companies who will use these funds to help their employees during this difficult time,” Shipley said.
Legacy received the loan on April 10 from the People’s Bank. Just nine days earlier, the company announced a new credit agreement with Capital One which gave him access to an additional $ 25 million.
The company is the fourth largest manufacturer of manufactured homes in the country, with sales primarily concentrated in Texas, Georgia, Kansas, Florida and Oklahoma. Its homes range from 390 to 2,667 square feet, with prices between $ 22,000 and $ 140,000. It had 800 employees, including 700 hourly employees, on its payroll at the end of 2019.
While the PPP program began accepting new demands on Monday, the bailout fund’s $ 349 billion launch round continues to draw criticism. Several large public companies – and NBA Los Angeles Lakers – repay their loans, while others insist that they followed the rules.
A Dallas hotel group led by Monty Bennett said he was keeping the $ 126 million he received in loans. Fiesta Restaurant Group, parent company of the Taco Cabana and Pollo Tropical brands, said earlier that he was examining her eligibility for the $ 15 million loans she received.
The SBA said Monday the companies returned $ 2 billion.
Thousands of small businesses get a second chance at a financial lifeline with the program’s new $ 310 billion loan round, but industry experts expect funds to run out in days . Lenders such as banking giants JPMorgan Chase and Bank of America had already received thousands of requests.
The P3 is a critical part of the $ 2 trillion federal stimulus package. It allows banks to offer federally subsidized loans on terms not available in the private market. Borrowers benefit from an interest rate of 1% and can be canceled entirely if they continue to pay their employees during the crisis.
Nearly 80% of small businesses that applied for loans were still waiting for a response when the first round of funding ran out, according to a survey by the National Federation of Independent Businesses.
Bloomberg contributed to this story.