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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.

Bipartisan group of senators unveil $908 billion COVID stimulus proposal

Sens. Joe Manchin (D-W.Va.) and Susan Collins (R-Maine) in the Capitol in 2018. Photo: Tom Williams/CQ Roll Call

A bipartisan group of senators on Tuesday proposed a $908 billion coronavirus stimulus package, in one of the few concrete steps toward COVID relief made by Congress in several months.

Why it matters: Recent data shows that the economic recovery is floundering as coronavirus cases surge and hospitals threaten to be overwhelmed heading into what is likely to be a grim winter.

Inside Patch's new local newsletter platform

Illustration: Annelise Capossela/Axios

Patch, the hyperlocal (and profitable) local digital news company, has built a new software platform called "Patch Labs" that lets local news reporters publish their own newsletters and websites, sources tell Axios.

Why it matters: It follows a growing trend of journalists going solo via newsletters at the national level.

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