LOS ANGELES--(BUSINESS WIRE)--Mr. C Beverly Hills housekeeping workers yesterday filed a complaint with the Small Business Administration asking whether the hotel’s $3.5 million in Paycheck Protection Program (“PPP”) loans meant for small businesses actually went to workers as intended by Congress.
The luxury hotel was approved for a $1.549 million PPP loan on May 1, 2020 through owner Morning View Hotels- BH I LLC, and a $2 million loan on February 14, 2021 through the same entity. According to data released by the SBA as of April 13, both loans were classified under “Exemption 4,” which the SBA describes as “disbursed but not Paid in Full or Charged Off,” and listed $1,549,487 and $1,999,998 under the PAYROLL_PROCEED fields, which the SBA describes as the “Amount of proceeds assigned to payroll (at origination).”
In the complaint, workers demanded to know how much, if any, loan funds will be or have been used for non-payroll costs, as the hotel reported it only employed an average of 7% of the 42 housekeepers represented by Local 11 for the time period August 31, 2020 through February 21, 2021, according to housekeeping schedules which the hotel provided to the Union. This time period partially overlaps with the 24-week term of the hotel’s May 1, 2020 loan and with the start of the term of the hotel’s February 14, 2021 loan.
Workers also questioned why the hotel’s second loan, which according to the SBA was tied to the retention of 46 jobs, was for a larger amount than its first loan tied to the retention of 127 jobs.
Congress intended for PPP loans be used by small businesses to keep workers on payroll, not to subsidize large hospitality conglomerates. Yet hotel chains like Mr. C appear to have used a loophole in the law to apply for these limited funds. Workers want to ensure that any funds received by Mr. C are used as Congress intended: to put workers back to work.
Meanwhile, the SBA has proceeded with processing loan forgiveness applications; as of April 8, SBA had forgiven and paid back over $228 billion—while denying forgiveness for only $700 million. Workers are concerned that the loans approved for Mr. C may be forgiven without adequate investigation, but the SBA’s limited data disclosure to date make this a mystery.
UNITE HERE Local 11 is a labor union representing over 32,000 hospitality workers in Southern California and Arizona who work in hotels, restaurants, universities, convention centers, and airports.