UCB Receives $700,000 to $2 Million in PPP Loans
The theatre said it would use the funds to retain 160 employees.
|Seth Simons||Jul 7, 2020||3|
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In April UCB received two loans totaling $700,000 to $2 million from the Paycheck Protection Program, according to records received yesterday by the Small Business Administration. The loans, each between $350,000 and $1 million, were granted to the company’s training centers in New York City and Los Angeles. SBA records show that UCB indicated in its loan applications that it would use the loans to retain a total of 160 employees in both cities.
The Paycheck Protection Program provides forgivable loans to small businesses affected by the Covid-19 pandemic. They are intended to help businesses keep employees on payroll, and they are eligible for forgiveness if businesses spend 60% of them on payroll within 24 weeks. The remaining 40% must be spent on certain other expenses, such as rent, mortgage payments, utilities, and interest on longterm debts.
Under existing PPP guidance, businesses are not permitted to spend the loans outside those categories. If they fudge the percentages within those categories—spending less than 60% on payroll and more on rent, for instance—the loans would no longer be fully forgivable. The business could receive partial forgiveness for the amount it spent on payroll, and would repay the rest a rate of one percent over two or five years.
UCB was approved for the loans in early April, according to the SBA. It indicated in its application that it would use the loans to retain 79 jobs at the LA Training Center and 81 jobs at the NYC Training Center. This comports with former CFO Daryl La Fountain’s statement to me in late March that he let 160 people go in a round of layoffs that month. UCB announced later in April that it was closing its New York locations.
As best I can tell, UCB has not used the PPP funds to retain 160 employees. Former employees tell me they are not aware of the theater bringing back anyone it laid off. To my knowledge, UCB’s current skeleton staff includes Academic Director Johnny Meeks, another school director in Los Angeles, and a finance manager in NYC. It’s also employing a handful of part-time instructors to teach online classes. The Training Center’s website lists 31 classes set to begin this month, taught by 22 instructors. Some back-of-the-napkin calculations indicate that 22 is less than 160.
(One other interesting thing about the loans: The SBA data includes demographic info voluntarily submitted by loan applicants. Whoever filled out the application for UCB described it as “Female-Owned.”)
I reached out yesterday to Meeks, La Fountain, and Matt Besser with a few questions about the PPP loans. I have not heard back from any of them. My suspicion is that UCB has elected to go the low-interest loan route, and is using the funds at least in part to pay off remaining expenses on the New York training center class and office spaces, in addition to payroll for its remaining employees.
Again, this is not necessarily illegal. It’s just notable that UCB applied for the loans under the auspices of bringing 160 employees it doesn’t appear to have brought back. One cannot help but wonder what an audit of the theater’s books—perhaps led by the collective working to restructure the theater—might reveal.
Header image via Travis Wise on Flickr.
This post has been updated to reflect that Daryl La Fountain is no longer employed by UCB.