When you boast about your company being worth a billion dollars, you're going to attract scrutiny. That was true for the veracity of Kanye West's claim re: Yeezy, and it's once again the case following the revelation that his brand received a loan of more than $2 million under the Paycheck Protection Program (PPP).
Yeezy received between $2 million and $5 million through the PPP, according to a disclosure report from the U.S. Treasury’s Small Business Administration and as reported by Forbes. The news raises questions as to why a brand reported by Forbes to be worth at least $1.5 billion would need such a loan from the government — or, alternatively, as to just how hard the fashion industry has been hit by the COVID-19 pandemic.
#WestDayEver? — West has returned with a chokehold on the spotlight in recent weeks because of his announced partnership with Gap and declared intentions to run for president. Read most cynically, the latter development suggests his album is indeed on the way. But if he truly does intend to run against his buddy Trump for the nation's highest office, what does it say that a purported billionaire is borrowing money from the government to keep their business afloat? (In addition to everything else that would seemingly disqualify a Kanye West presidency.)
Yeezy reportedly brought in $1.3 billion in 2019, most of which likely came from the brand's partnership with Adidas, as its solo line has been largely dormant. Despite this, the brand was able to secure a loan through the PPP program, which is intended to support small businesses by offering loans from lending institutions backed by U.S. Small Business Administration. The rules state 60 percent of these loans must be used for payroll, and the loans will be forgiven if used entirely for payroll, interest on mortgages, rent, and utilities.
Luxury brands have also received loans — Yeezy is far from the only fashion brand receiving loans through PPP, as the Financial Times reports Vera Wang and Carolina Herrera — the latter of which is owned by the Spanish group Puig and was valued at more than $1 billion in 2016 — were the recipients of loans between $2 million and $5 million. Rag & Bone, Alice + Olivia, and the online retailer Moda Operandi also received between $5 million and $10 million.
Elsewhere, the Los Angeles Lakers drew scrutiny for receiving a $5.6 million PPP loan in April before deciding to give it back. The team was worth an estimated $3.8 billion in 2019, according to Forbes, making it the eighth-most valuable sports franchise in the world and the second most valuable in the NBA. Other large companies including Shake Shack and the parent company of Ruth's Chris Steak House were criticized for receiving loans intended for smaller businesses. Both ended up returning the money.
"This was a program designed for small businesses," Treasury Secretary Steven Mnuchin told CNBC. "It was not a program that was designed for public companies that had liquidity."
Has West abused the system? — West retains 100 percent ownership of Yeezy, and at the very least the company receiving money intended for small businesses looks questionable. As a whole, the fashion industry is expected to see a loss of revenue between 27 and 30 percent, according to Business of Fashion. That may indeed have spelled trouble for Yeezy without government assistance, but you have to wonder what kind of liquidity the brand has and if it would disqualify it under the terms of Mnuchin's statement.
Then again, it's possible that this is just a misunderstanding. Axios reports that several companies denied having applied for or received PPP loans after appearing in the disclosure reports listed Monday. Input has reached out to Yeezy with a request for comment and will update if there's a response.