FaZe Clan, Jeffree Star and MrBeast Received Coronavirus Relief Loans
A number of high-paying online figures have received federal relief loans intended to help small businesses weather the pandemic, including MrBeast, Jeffree Star and FaZe Clan.
Companies owned by YouTubers MrBeast and Jeffree Star were approved for Paycheck Protection Program (PPP) loans this spring, according to ProPublica’s searchable database. MrBeast YouTube LLC and Jeffree Star Cosmetics, Star’s makeup company, were approved for loans of $ 350,000 to $ 1 million. FaZe Clan Inc, an esports lifestyle brand and games organization that employs approximately 70 gamers and content creators, has been approved for a loan of $ 1 million to $ 2 million.
The loans were specifically created to help small businesses severely affected by the coronavirus pandemic retain their employees. With a one percent interest rate and the possibility of full loan cancellation “if all employee retention criteria are met and funds are used for qualifying expenses,” PPP loans are particularly needed for small businesses that have not been able to operate in a serious social context. distancing restrictions.
The loans from MrBeast and Jeffree Star are particularly surprising as the two YouTubers have built brands on luxury and extravagance.
MrBeast YouTube LLC
MrBeast, which has 42.8 million subscribers, frequently distributes cash prize, cars, and more recently, a private island by wacky waterfalls. Describing MrBeast as “the viral YouTube philanthropist”, Verge reported that the lavish giveaways he holds are funded by branding deals and YouTube’s AdSense revenue. At the height of the Black Lives Matter protests in June, MrBeast promised to share a donation of $ 150,000 between an anti-racial equality organization, an organization that fights for police reform, and five small business owners who would receive $ 10,000 each. MrBeast YouTube LLC was approved for a PPP loan on April 14, 2020.
A representative from MrBeast YouTube LLC confirmed that the company received a PPP loan, but did not specify how much the company received. The representative told Mashable that the company has more than 40 employees and that many branded partnerships have failed in the wake of the pandemic. Only seven jobs are listed in the Small Business Administration (SBA) data, which the representative attributed to an “initial write error on the application.”
In total, MrBeast YouTube LLC received a PPP loan of $ 377,000.
“Several sponsors withdrew from the projects, our advertising revenue fell by 70% and we had a lot of finished videos that we couldn’t publish,” the rep continued. “We didn’t have access to testing, so we had no idea when we would be able to produce new content. We thought this was the best avenue that would help us weather the storm.”
The representative added that business had “fortunately rebounded” in the months following the first blow of the social distancing regulation, and that Donaldson “has created more than 50 full-time jobs” in Greenville, NC. North, where he currently resides.
“The MrBeast LLC is different from Jimmy’s personal accounts,” the rep continued. “All charitable donations, including $ 150,000 to Black Lives Matter and $ 250,000 to SpecialEffect, of course, did not come from corporate resources.”
Jeffree Star Cosmetics
Jeffree Star, who boasts 17.2 million subscribers, was among the Forbes’ Highest Paid YouTubers in 2018. He grossed $ 18 million, Forbes reported, and her makeup company Jeffree Star Cosmetics was worth around $ 100 million. Revenue likely took a hit when Morphe, a makeup brand and physical store for Jeffree Star Cosmetics, cut ties with Star following backlash for his story of blatant racism.
After YouTuber Tati Westbrook uploaded a explosive video Claiming that Star and YouTuber Shane Dawson had “manipulated” her into publicly condemning her protege James Charles for being jealous of the much younger influencer’s success, former fans turned their backs on Star and Dawson. However, it all fell apart in July. Jeffree Star Cosmetics was approved for a PPP loan on May 3.
Representatives for Jeffree Star Cosmetics did not respond to multiple inquiries from Mashable about whether the company had received any loans in the range cited in the SBA data.
FaZe Clan is valued at $ 240 million, ranking fourth on Forbes‘ most valuable esports companies. Both an esports organization and a lifestyle brand, its backers include rapper Offset, Pitbull, and NBA players Josh Hart and Jamal Murray. At the beginning of April this year, the organization firm a $ 40 million funding round that also secured an exclusive partnership with NTWRK, an e-commerce platform that also works with Nike and Puma.
“As a growing company, we continued to expand our staff in January. We are grateful for the PPP loan as it has allowed us to retain 100% of our employees despite having had to cut our revenue forecast by millions in esport alone due to the pandemic, ”said Lee Trink, CEO of FaZe Clan, in a statement to Mashable. “Our intention has always been to repay the loan in full and we plan to do so as soon as it is safe to do so. ”
“I don’t see this terrible moment as an opportunity,” Trink said. Forbes on fundraising during a pandemic. “But we’re fortunate to be in the right industry for a time like this, as everyone turns to esports and streaming, and we’re positioned to be bigger on the other side. ”
The SBA approved the approximately $ 1.1 million loan that same month, FaZe Clan communications manager Chelsey Northern confirmed in an email to Mashable. In a follow-up email, FaZe Clan clarified that the company actually closed the deal in December 2019 and that it was announced in April of this year, just before it was approved for the PPP loan.
Northern noted that none of the PPP funds the company received had been allocated to players and content creators themselves.
Fans crowd in front of the FaZe Clan storefront in anticipation of the business collaboration with rapper Offset, who is an investor.
Credit: Jerritt Clark / Getty Images
A House oversight committee concluded that thousands of PPP loans have been made to companies that should not have received them. In a report released last Tuesday by the select subcommittee on the coronavirus crisis, the Trump administration has distributed loans to companies that have not completed full applications, to companies that have been reported for “significant performance and business issues. ‘integrity’ and to companies that have been banned from federal contracts. While the loans have kept thousands of small businesses shutting down during the pandemic, many large businesses got loans before small businesses could.
Meanwhile, the small businesses that need loans the most have been largely excluded from the early rounds of loan distribution. Economists from the University of Chicago and MIT find that only 15 percent of establishments in areas “most affected by declining hours worked and business closures” received PPP funding. In the least affected areas, on the other hand, 30% of establishments have benefited from PPP financing. The loan program faced a major backlash for the allocation of millions to business law firms, hedge fund managers, and Trump-related companies.
However, approved loan numbers can be inflated and the SBA data is riddled with discrepancies. Of the nearly 4.9 million loans granted in July, the Los Angeles Times reports, 554,146 approved applications indicated no retained jobs and 324,122 left the section blank. Seven loans actually listed negative jobs retained. The Times noted that many small businesses have been approved for much larger loans than they actually received; borrowers apply through an approved lender, and once the SBA approves, the lender and the borrower can negotiate a lower amount.
“The SBA and the Treasury did not explain how some million dollar loans in the data are much higher than the amount that some borrowers said they requested and received,” he added. Times writing.
As thousands of small businesses struggle to stay afloat amid continued social distancing restrictions, YouTubers and other online personalities are still able to safely produce content. Heavily successful companies like Jeffree Star’s and FaZe Clan aren’t the brands that are suffering the most right now.
MrBeast, meanwhile, has a warning for unsolicited calls for help on his YouTube channel. about the page.
“Don’t email me asking for money, YOU WILL BE IGNORED AND BLOCKED,” he wrote.
UPDATE: September 10, 2020, 2:17 p.m. PDT Updated with clarification on funding for FaZe Clan Series A, which ended in December 2019.
Additional reporting by Brian Koerber.