Updated on Monday Aug. 9 with additional details.
Not that long ago, Rover was on a very short leash.
In March 2020, as the realities of the pandemic became clear, the shutdown in global travel and in-person work significantly reduced demand for the Seattle-based company’s marketplace, which connects pet owners with people who can host, walk, or care for their pets when they’re at the office or on a trip.
Faced with unprecedented uncertainty, Rover made what CEO Aaron Easterly called a “gut-wrenching” decision, laying off about 41% of its workforce, or nearly 200 people, as part of a broader set of cutbacks.
Like many other companies, Rover also applied for a Small Business Administration (SBA) Paycheck Protection Program (PPP) loan, and it received one for $8.1 million in April 2020.
The big advantage of these loans, apart from the low interest rate, is that they are forgivable, if a business spends the money in line with SBA guidelines. Nationally, about 80% of PPP loans have been fully or partially forgiven.
Rover chose a different path. The company disclosed in a regulatory filing Thursday afternoon that it recently paid off its PPP loan, plus interest and fees, returning a total of $8.2 million.
The move reflects how much has changed for the company in the last 18 months. For one thing, rising pet adoption rates and increased spending on pets have boosted Rover’s business.
But more to the point, Rover this week became the Seattle region’s newest public company through a merger with a publicly traded special purpose acquisition company, or SPAC, raising $240 million in the process.
“As a business closely tied to the travel industry, we were able to utilize these resources to help sustain the business during the height of the pandemic,” said Rover spokesman Dave Rosenbaum via email in response to GeekWire’s inquiry. “Now that our business has normalized, we have repaid the loan.”
Rover is back up to 320 employees worldwide, after declining to 275 following its layoffs last year.
PPP loans to public companies became a subject of controversy last year.
The SBA’s guidelines discouraged participation by companies with “access other sources of liquidity sufficient to support their ongoing operations,” and said it was “unlikely that a public company with substantial market value and access to capital markets” would be able to pledge truthfully that it needed the money to survive.
However, there’s a gray area when it comes to companies that have gone public, been acquired, or raised big funding rounds after receiving PPP loans.
Seattle-based Porch Group received an $8.1 million PPP loan in April 2020. Porch went public in December through a SPAC merger of its own, raising $322 million in the process.
The same month it went public, Porch submitted an application for forgiveness of the loan, according to its latest quarterly filing with the SEC.
However, the Porch filing, dated May 19, cautioned that there was “no assurance” that it would be able obtain forgiveness of the PPP loan. Porch CEO Matt Ehrlichman declined to comment this week due to the quiet period in advance of the company’s Aug. 16 earnings report.
One longtime publicly traded company, Seattle-based RealNetworks, said it in its quarterly filing this week that it received full forgiveness of its $2.9 million PPP loan in June. The company was able to use the PPP funds to bring back some of its furloughed workers at the time.
“We follow the rules very rigorously,” RealNetworks CEO Rob Glaser told GeekWire last year. “We’re very thoughtful about it, and we feel like this is a program that makes sense for us.”
Like Rover, some companies whose circumstances have changed have chosen to pay back their PPP loans.
Bardy Diagnostics, the Seattle-based medical device maker that received a $2.6 million PPP loan, says it will be paying the loan off in full, plus interest, in conjunction with the expected closing Friday of its $375 million acquisition by Hillrom, which follows a legal dispute between the companies over the acquisition.
Seattle-based marketing technology startup Amperity, which just raised an additional $100 million investment that valued the company at more than $1 billion, paid off its $3.8 million PPP loan in full last year.
Update, Monday Aug. 9: Seattle-based cybersecurity firm ExtraHop said it has also paid back its PPP loan in full. ExtraHop received $10 million through the program, according to public records. ExtraHop was acquired by Bain Capital Private Equity and Crosspoint Capital Partners in a deal valuing the company at $900 million. Announced on June 8, the deal closed July 22.
Editor’s Note: GeekWire applied for and received two PPP loans of $262,820 each. So far, one of those loans has been fully forgiven.
