Car-sharing startups take US loans after Covid-19 disruptions
Getaround Inc. and Turo Inc., car-sharing companies that have been valued at more than $1 billion by private investors, said Monday that each took at least $5 million through the US Paycheck Protection Program, a government program intended to help small businesses ride out the disruptions caused by the coronavirus pandemic.
The San Francisco-based startups are among the most valuable technology companies to say they applied for and kept financial aid from the loan program after Covid-19 levied a severe toll on the transportation business. Several large companies, including Shake Shack Inc., gave back the money under public pressure.
According to federal data released Monday, each company received between $5 million and $10 million in federal loans approved in late April. Some companies included on the list of loan recipients have said they did not actually apply for or accept the money, casting some doubt on the official data, but Getaround and Turo both confirmed they’d taken the loans, though they didn’t respond to questions about their exact values.
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“On a global basis, our business was drastically impacted by the lockdowns and restrictions stemming from the coronavirus pandemic," Getaround said in an emailed statement. “The PPP program helped reduce the otherwise severe impact on the health of our organization. In turn, this enabled us to continue providing an essential service to the communities we serve."
“PPP funds were a lifeline for our 244 employees and our community of hosts and guests who rely on Turo to offset the cost of owning a car and travel affordably," Steve Webb, a spokesman for Turo, wrote in an emailed statement. “At a time when millions of Americans are struggling to make ends meet, we’re proud that our marketplace is still here to help folks generate extra revenue."
Investors once had high expectations for car-sharing. SoftBank’s $100 billion Vision Fund made a sizable investment in Getaround in 2018. But the industry, which had shaky financial prospects even before the pandemic hit, was devastated by Covid-19. Few people wanted to ride in someone else’s private vehicle, and local stay-at-home restrictions in major cities ground most automotive transportation to a standstill.
Getaround and Turo both made sharp job cuts in March, and Getaround began shopping around for a potential acquirer. Some people who rented out their cars on Getaround complained that it had become increasingly difficult to get the company to pay for damages. While cars have begun to return to the roads in recent months, the startups still face major challenges.
The Paycheck Protection Program was established in March as a series of loans for small businesses that would be forgiven if the recipients avoided staff cuts and met other criteria. The program was renewed in April after the initial $350 billion was quickly exhausted. Some startups—and even some Uber drivers—applied for loans, leading to a backlash, while others shied away from claiming them after deciding the conditions were too confusing.