Chinese EV startups given paycheck protection loans of $5 million in US: Report1 min read . Updated: 07 Jul 2020, 07:56 PM IST
It is reported that despite automotive startups backed by Chinese investors sacking people, they were given loans in the US to prevent exactly that.
At a time when US President Donald Trump has been squaring off against China over a range of issues which include trade barriers and suspicions of corporate espionage, the US Treasury Department and the Small Business Administration (SBA) has revealed that Chinese EV startups reportedly received at least $5 million as part of paycheck protection loans.
Byton, Nio and Karma Automotive are some of the names revealed in companies to have received these loans in order to tide over the current crisis stemming out of Covid-19 pandemic. According to a report in The Verge, these Chinese EV startups received some of the largest loans doled out by SBA. The report, based on data reportedly released by SBA, highlights that Byton - a startup backed by China's state-owned First Auto Works - had said in its loan application that the money would help it avoid job cuts but then went on to announce lay offs last week at its North American headquarters.
Nio is learnt to have given out the same reason about avoiding job cuts in its loan application. The startup had already received nearly $1 billion from state-owned investment firms in China and had said it is for product development. (Full report here)
Despite rumours of even more layoffs in the offing after many employees were sacked last year, Karma Automotive reportedly secured a loan amounting to somewhere between $5 million and $ 10 million.
US media has reported that SBA loans were meant for companies with less than 500 employees and looking at ways to prevent layoffs. The data were originally not intended to be made public but SBA reportedly faced increasing pressure to do so.
That loans were provided to Chinese automotive startups - besides others, itself may not invite as much ire as the fact that these startups have reportedly sacked many employees before and after. The Verge report highlights that while the names of companies receiving the loans were revealed, the amount was not.