DETROIT (Reuters) - Most of Ford Motor Co’s (F.N) U.S. dealers received payroll protection loans from the U.S. government amid the coronavirus pandemic, the automaker’s chief operating officer said on Thursday.
Early in the outbreak, Ford “made sure” its U.S. dealers applied with the U.S. Small Business Administration for federal loans to protect their payrolls and employees, Jim Farley said during the company’s annual shareholder meeting held online.
“This really paid off because about 90-plus percent of our dealers applied and now more than 80% have been funded,” he said.
Ford worked closely with its network of just over 3,000 U.S. franchised dealers to ensure they were aware of the loan process and tracked their progress, spokesman Said Deep said after the meeting.
“They are independent businesses, and they all have their own relationships with their banks, so that was the extent of our involvement,” Deep said in an email.
Auto dealers were hard hit by the outbreak, with some states temporarily barring new-vehicle sales. Sales have plummeted amid stay-at-home orders aimed at curbing the spread of the highly contagious novel coronavirus.
The U.S. government’s “Payroll Protection Program” to aid small businesses, part of an economic relief package passed by Congress, opened chaotically in April and ran out of funds in less than two weeks. The SBA then processed a second batch of applications.
The loans are forgivable if companies use at least 75% on payroll expenses.
The program has been criticized for not getting loans to the smaller firms that need them and have few other capital sources.
Ford’s Farley said Thursday the No. 2 U.S. automaker watches its dealers’ profitability closely, and that in March and April those dealers were in “great shape” and their financial health was improving daily as state economies reopened.
Asked when Ford might reinstate the dividend payout it suspended in March, Chief Financial Officer Tim Stone said that would be an option after the company repays its corporate revolver debt. The suspension saved Ford money at an annual rate of $2.4 billion.
Reporting by Ben Klayman in Detroit; Additional reporting by David Shepardson; Editing by Bernadette Baum