Axios, which qualified for a federal Paycheck Protection Program loan to avoid layoffs, will return the money, after nearing a deal for an alternative source of capital.

Why it matters: In the four weeks since Axios applied for the loan, based on big coronavirus business losses, there has been a public backlash against a variety of companies for taking the PPP, including us. 

  • Some critics say media companies like ours should not qualify, period. Others argue that venture-backed start-ups should seek capital elsewhere, even if it hurts the business. 

What changed? Two things:

  1. The program has become much more politically polarized since its inception.
  2. We continued to explore other capital. Over the past week, a new alternative source emerged, giving us the confidence to return the PPP funds.

We’re disclosing our thinking on returning the funds with the same transparency as our decision to reveal that we had qualified for a loan:

  • The intent of the program was to provide funding to businesses that are smaller than 500 employees (we have 190) and would have to eliminate jobs without it, and could not get capital at reasonable cost elsewhere. 
  • That very much described our situation. Our physical events business was shut down, and some ad buyers canceled contracts. Our primary concern was, and remains, protecting the jobs and safety of our people.
  • But the program has become divisive, turning into a public debate about the worthiness of specific industries or companies.
  • While applying for the loan felt like the right and prudent thing to do one month ago to protect our 190 employees, if we knew then what we know now, we would have gutted it out and hoped for the best.

The bottom line: We remain fully committed to protecting the jobs of all 190 existing employees.

  • This will hopefully free up $4.8 million in loans for other small businesses still struggling to find capital.

Go deeper

Updated Aug 5, 2020 - Axios Events

Watch: Small business recovery during the pandemic

On Wednesday August 5, Axios co-founder Mike Allen and "Axios Today" host Niala Boodhoo hosted the last of a six-event series on how small businesses have pivoted during the coronavirus outbreak, featuring Sen. James Lankford (R-Okla.), owner of The Curvy Bride Michelle Files and Satori Yoga studio owner Andrea Stern.

Sen. Lankford discussed the federal government's response to the pandemic, financial support for small businesses, and the importance of NGOs as economic safety nets within communities.

  • On the effectiveness of PPP loans: "The Paycheck Protection Program has had some problems, but overwhelmingly it's been very, very successful. Paycheck Protection Program was designed to keep small businesses and not-for-profits running so their people didn't have to end up on unemployment assistance...and it has done that."
  • How the coronavirus has changed the economies of small towns: A lot of small towns in Oklahoma have had their highest tax revenue they've ever had in the history of their towns this year...They're used to those folks in small towns driving to big cities to shop. But they're not. They're staying at home. They're shopping online."

Michelle Files and Andrea Stern highlighted the unique challenges of running a small business during the pandemic and how their respective businesses have pivoted to digital tools in these changing times.

  • Michelle Files on adapting her brick-and-mortar business to a virtual world: "Mobile appointments...really took off. People loved that they were still able to shop from the comfort of their own home. I would just bring the dresses to them and safely be on a Zoom call from my car with any questions that they would have."
  • Andrea Stern on transitioning to live, online yoga classes: "We decided that livestream was the best way to go...one of the nice parts about livestream is that [instructors] actually have people in front of them. You can get feedback from the students. It was just a matter of getting everyone up to speed on the technology."

Axios co-founder and CEO Jim VandeHei hosted a View from the Top segment with CEO of the Small Business and Entrepreneurship Council Karen Kerrigan, who discussed trends in how small businesses have adjusted to the new economy.

  • "[Small businesses] are massively moving to technology platforms. 51% said that they've upped their use of social media in order to engage with customers and find new customers. So they really embrace technology at this very critical time, which is helping them to survive the COVID-19 economy."

Thank you Facebook for sponsoring this event.

How small businesses got stiffed by the coronavirus pandemic

Illustration: Aïda Amer/Axios

The story of American businesses in the coronavirus pandemic is a tale of two markets — one made up of tech firms and online retailers as winners awash in capital, and another of brick-and-mortar mom-and-pop shops that is collapsing.

Why it matters: The coronavirus pandemic has created an environment where losing industries like traditional retail and hospitality as well as a sizable portion of firms owned by women, immigrants and people of color are wiped out and may be gone for good.

Apple's antitrust fight turns Epic

Illustration: Aïda Amer/Axios

Millions of angry gamers may soon join the chorus of voices calling for an antitrust crackdown on Apple, as the iPhone giant faces a new lawsuit and PR blitz from Epic Games, maker of mega-hit Fortnite.

Why it matters: Apple is one of several Big Tech firms accused of violating the spirit, if not the letter, of antitrust law. A high-profile lawsuit could become a roadmap for either building a case against tech titans under existing antitrust laws or writing new ones better suited to the digital economy.