Avid has more than 1,400 employees and a market capitalization of $250 million, which ordinarily would make it too big to qualify for the Small Business Administration loans under the CARES Act.
A company spokesman, Dave Smith, said that Avid qualified under the SBA’s “alternative size standard,” which allows companies to receive funding if they have net tangible assets of less than $15 million and average net income of less than $5 million for the preceding two years. Avid reported net income of $7.6 million in 2019, and a net loss of $10.7 million for 2018.
After several publicly traded companies disclosed that they had received PPP loans last month, the Treasury Department issued updated guidance, saying it was “unlikely that a public company with substantial market value and access to capital markets” would qualify.
Last Friday, the Democrats on the coronavirus oversight committee sent letters to five large companies asking them to return their PPP loans. The committee members focused on publicly traded companies that had received $10 million or more, and had market caps of $25 million or more and more than 600 employees.
Avid, based in Burlington, Mass., reported last week that revenues for its “products and solutions” dropped 36.2% — or by $19.7 million — in the first quarter of 2020 due to the pandemic.
The company said it has already undertaken temporary furloughs and pay cuts in response. Avid projected that the slowdown — caused by the suspension of TV and film production, the cancelation of concerts and sporting events, and other factors — would impact its business at least through the end of 2020.
Last month, Dolphin Entertainment — the parent company of 42West and several other PR firms — disclosed that it had received $2.1 million from the program. Cinedigm Corp., the digital distributor of which Hong Kong-based Bison Capital owns majority control, received $2.2 million in PPP loans.
The PPP loans carry an annual interest rate of 1%, and are likely to be forgiven if companies can show they used the money to retain their workers.