A number of high-earning online figures received federal relief loans designated for helping small businesses to get through the pandemic, including MrBeast, Jeffree Star, and FaZe Clan.
Companies belonging to YouTubers MrBeast and Jeffree Star were approved for Paycheck Protection Program (PPP) loans this spring, per 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 gaming organization that employs roughly 70 players and content creators, was approved for a loan of $1 to $2 million.
The loans were specifically created to help small businesses severely affected by the coronavirus pandemic to retain their employees. With a one percent interest rate and the potential for full loan forgiveness “if all employee retention criteria are met and the funds are used for eligible expenses,” PPP loans are especially needed by small businesses that haven’t been able to function amid severe social distancing restrictions.
MrBeast and Jeffree Star’s loans are particularly surprising because both YouTubers have built brands on luxury and extravagance.
MrBeast YouTube LLC
MrBeast, who has 42.8 million subscribers, frequently gives away cash prizes, cars, and most recently, a private island through outlandish stunts. Describing MrBeast as “YouTube’s viral philanthropist,” Verge reported that the lavish giveaways he holds are funded by brand deals and YouTube’s AdSense revenue. At the height of Black Lives Matter protests in June, MrBeast pledged to split a $150,000 donation between an organization for fighting racial equality, an organization that fights for police reform, and five small business owners who would received $10,000 each. MrBeast YouTube LLC was approved for a PPP loan on April 14, 2020.
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A representative for MrBeast YouTube LLC confirmed that the company received a PPP loan, but did not clarify how much the company received. The representative told Mashable that the company had over 40 employees and many brand partnerships fell through in wake of the pandemic. Only seven jobs are listed in the Small Business Administration (SBA) data, which the representative chalked up to an “initial clerical error on the application.”
In total, MrBeast YouTube LLC received a PPP loan of $377,000.
“Multiple sponsors pulled out of projects, our advertising revenue plummeted by 70 percent, and we had numerous finished videos we couldn’t post,” the representative continued. “We didn’t have access to testing, so we also had no idea at the time when we would be able to produce new content. We felt this was the best avenue that would help us weather the storm.”
The representative added that business has “thankfully rebounded” in the months since the initial hit of social distancing regulations, and that Donaldson “created over 50 full-time jobs” in Greenville, North Carolina, where he currently resides.
“MrBeast’s LLC is different from Jimmy’s personal accounts,” the representative continued. “All charitable donations, including a $150,000 to Black Lives Matter and $250,000 to SpecialEffect of course did not come from company resources.”
Jeffree Star Cosmetics
Jeffree Star, who boasts 17.2 million subscribers, was listed among Forbes’ highest paid YouTubers in 2018. He brought in $18 million, Forbes reported, and his makeup company Jeffree Star Cosmetics was worth an estimated $100 million. Revenue likely took a hit when Morphe, a makeup brand and brick and mortar store for Jeffree Star Cosmetics, cut ties with Star following backlash for his history of blatant racism.
After YouTuber Tati Westbrook uploaded an explosive video claiming that Star and YouTuber Shane Dawson “manipulated” her into publicly condemning her protégé James Charles because they were jealous of the much younger influencer’s success, former fans turned their backs on Star and Dawson. That, however, all went down in July. Jeffree Star Cosmetics was approved for a PPP loan on May 3.
Representatives for Jeffree Star Cosmetics did not respond to Mashable’s multiple inquiries about whether the company received loans in the range cited in SBA data.
FaZe Clan
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. In early April this year, the organization closed 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 business, we continued to expand our staff in January. We are grateful for the PPP loan because it has allowed us to retain 100 percent of our employees despite having to reduce our revenue projection by many millions in esports alone due to the pandemic,” FaZe Clan CEO Lee Trink said in a statement to Mashable. “It has always been our intention to repay the loan in full and we plan to as soon as it is safe to do so.”
“I do not look at this terrible moment as an opportunity,” Trink told Forbes about raising money during a pandemic. “But we are fortunate we are in the right industry for a moment like this, when everyone is turning to esports and streaming, and we are positioned to be bigger on the other side of it.”
The SBA approved the roughly $1.1 million loan the same month, FaZe Clan’s Head of Communications Chelsey Northern confirmed in an email to Mashable.
Northern noted that none of the PPP funds the company received were allocated to the players and content creators themselves.
Fans crowd outside the FaZe Clan storefront in anticipation of the merchandise collaboration with rapper Offset, who’s an investor.
Image: Jerritt Clark / Getty Images
Controversial loans
A House oversight committee concluded that thousands of PPP loans were awarded 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 distributed loans to companies that didn’t fill out complete applications, companies that have been flagged for “significant performance and integrity issues,” and companies that have been banned from federal contracts. While the loans have kept thousands of small businesses from shuttering during the pandemic, many large companies snagged loans before small businesses could.
Small businesses that need the loans the most, meanwhile, were largely excluded from the first few rounds of loan distribution. Economists at the University of Chicago and MIT found that just 15 percent of establishments in the areas “most affected by declines in hours worked and business shutdowns” received PPP funding. In areas least affected, in contrast, 30 percent of establishments received PPP funding. The loan program has faced significant backlash for awarding millions to corporate law firms, hedge fund managers, and companies with ties to Trump.
The approved loan numbers may be inflated, though, and the SBA data is riddled with discrepancies. Out of the nearly 4.9 million loans awarded as of July, the Los Angeles Times reports, 554,146 approved applications indicated zero jobs retained, and 324,122 left the section blank. Seven loans actually listed negative jobs retained. The Times noted that many small businesses were approved for loans much larger than they actually received; borrowers apply through an approved lender, and once the SBA approves, the lender and borrower can negotiate on a lower amount.
“The SBA and Treasury didn’t explain how some million-dollar loans in the data are much higher than the amount some borrowers said they applied for and received,” the Times writes.
As thousands of small businesses struggle to stay afloat amid continued social distancing restrictions, YouTubers and other online figures are still able to safely churn out content. Immensely successful companies like Jeffree Star’s and FaZe Clan are hardly the brands hurting the most right now.
MrBeast, meanwhile, has a warning for unsolicited appeals for help on his YouTube channel’s about page.
“Do not email me asking for money, YOU WILL BE IGNORED AND BLOCKED,” he wrote.
Additional reporting by Brian Koerber.