The Small Business Administration disclosed last Monday that Yeezy, a company by musician and clothing designer Kanye West, received loans amounting up to $5 million through the Paycheck Protection Program.
The company has stated that the loan was used to save 106 jobs during the COVID-19 pandemic, according to The Hollywood Reporter.
The PPP safety net
The Paycheck Protection Program, or PPP, was passed in May to counter the COVID-19 pandemic’s negative effects on the economy. It was designed to be a lifeline that could help small businesses preserve the jobs of their employees.
The loans from the PPP are forgivable, so long as the company spends the funds properly. Once a company reduces costs, by implementing pay cuts amounting to more than 25%, or by removing employees, the amount that can be forgiven will be reduced.
PPP loans are designed to cover more than two and a half times the average small company monthly payroll, with a monthly cap per employee of US$100,000 [AU$142,898].
However, some large companies like Shake Shack were able to benefit from the PPP. This prompted the government to comment that some businesses should figure out their “ability to access other sources of liquidity.”
The Yeezy effect
A report available to the public shows that Yeezy LLC was included in the list of companies that had access to PPP funds.
According to GQ, Yeezy received a loan between $2 million to $5 million, which the company used to save 106 employees’ jobs.
Kanye West tweeted in 2018 that his company would “hit a billion dollars this year,” GQ further reports.
In addition, he stated that Yeezy would be valued over $10 billion, which could only happen if the company was able to generate annual sales reaching $3 billion.
At the time, analysts found it hard to believe that Yeezy would be able to generate $1 billion in sales.
In comparison with other companies
GQ has noted that other companies that have received the same amount in loans were able to keep more jobs than Yeezy did.
Clothing retailer Kith received similar amounts and was able to save 254 jobs. Meanwhile, casual men’s apparel company Untuckit saved 921 jobs.
The two companies were able to do this with loans ranging from $5 million to $10 million.
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In partnership, West and Gap will create a new Yeezy Gap offering. ⠀ ⠀ ⠀ As the press release explains it, “under West’s creative direction, the Yeezy design studio will develop the new line to deliver modern, elevated basics for men, women, and kids at accessible price points.” (West will continue to produce the higher price point Yeezy collections independently.) ⠀ ⠀ ⠀ Eventually, West will have a hand in in-store concepts and the design of the company’s e-commerce site. “We are excited to welcome Kanye back to the Gap family as a creative visionary, building on the aesthetic and success of his Yeezy brand and together defining a next-level retail partnership,” Mark Breitbard, Global Head of Gap Brand, said in the release. Earlier this year, Gap announced a collaboration with Telfar Clemens and in the past it’s hooked up Heron Preston, Balmain, and Stella McCartney on a popular children’s offering. ⠀ ⠀ ⠀ Yeezy Gap is different; it is said to be a 10-year deal. @bof
Despite other companies seeing their current season’s worth of clothes unsold due to the coronavirus pandemic, West has recently announced that he has secured a major deal with Gap.
He will be designing hoodies and shirts for the brand, with the intention to sell the products globally.
In addition to this, Kanye West has also announced on Twitter that he will be running for president in the upcoming elections.
Featured image courtesy of Wikimedia Commons