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:
- The program has become much more politically polarized since its inception.
- 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.