John Mercadante’s e-commerce delivery business was burning cash, missing debt payments and struggling to raise capital, regulatory filings show, before two events brightened his company’s fortunes. First the coronavirus pandemic hit, leading to increased delivery orders for his Transportation and Logistics Systems Inc. of Jupiter, Fla. And even as the business got busier, two of its subsidiaries qualified for forgivable loans totaling $3.4 million under the federal government’s Paycheck Protection Program, the Wall Street Journal reported. The publicly traded company, known by its ticker symbol TLSS, hasn’t been accused of impropriety. But its financial situation and those of other public companies that received PPP loans are expected to come under scrutiny as the Treasury Department and Small Business Administration determine whether PPP loans qualify for forgiveness. In April, Treasury asked publicly traded companies that received loans to return the money, and updated its guidance to make it clear that borrowers must take into account “their current business activity,” including their ability to access cash to support ongoing operations. David Bamberger, a lawyer representing TLSS, said the company’s request for a loan was appropriate, and it plans to seek to have the loan forgiven. “The federal government offered a lifesaver, we qualified and we were kept afloat. As a result, so were our employees,” Bamberger said in response to emailed questions. But others say that companies that haven’t suffered during the crisis should have to pay back the loans, which were designed to help small companies — generally defined as having 500 or fewer full-time employees — maintain their payroll through the pandemic.
