The Firearms Industry and the Paycheck Protection Program

Table of Contents

Introduction

Many cities and regions of the country experienced record gun violence in 2020. Despite a record year for gun sales, an Everytown analysis found that the firearms industry received extensive support from the first tranche of funding from the federal Paycheck Protection Program. Specifically, the data indicates that at least 1,871 firearms-related businesses and organizations received PPP funds from the federal government totaling $156.9 million in 2020. In several specific instances, the federal government’s support of larger players in the firearms industry through the PPP is at odds with evidence about the strength of their respective businesses in 2020. Government assistance through the PPP includes $3 million to a producer of AR-platform weapons, $1.6 million to a manufacturer of silencers, and nearly $400,000 to one of the most prominent producers of ghost gun kits and parts in the United States.

An Unprecedented Surge in NICS Background Checks During the COVID-19 Pandemic

Federal law requires licensed dealers to run background checks on all potential gun buyers through the Federal Bureau of Investigation’s National Instant Criminal Background Check System (NICS), which enables a quick determination on whether a prospective buyer is eligible.¹ As such, the number of NICS background checks can be seen as a rough proxy for the strength of firearms sales in the United States in a given time period. From 2015 to 2019, an average of more than 26 million background checks were processed annually across the country, resulting in an estimated 14.3 million guns sold each year.²

In 2020, approximately 39.7 million NICS background checks were processed in the United States, a 40 percent increase over 2019.³ Everytown estimates 22 million guns were sold in 2020. In the background check system’s nearly three-decade history, six of the top 10 weeks with the highest number of background checks initiated occurred in 2020.⁴ A gun industry financial analyst described the state of demand by noting that gun owners seeking popular ammunition in 2020 have had to hunt for it from store to store like “the guy who’s buying milk during the hurricane.”⁵

The Industry Boasts About its Strong Year

The firearms industry has spoken brazenly about the strength of the gun market since the start of the pandemic. Articles in NRA magazines gleefully counted NICS background check data as if it was a scoreboard counting up to a record year for firearms sales: in fact, the NRA has publicly celebrated each monthly release of NICS data since last March.⁶ The NRA’s Shooting Illustrated also spoke to the issue of demand, writing that “according to manufacturers and retailers polled by Shooting Illustrated this week, ammunition is flying off the shelves at a record pace.”⁷

The National Sports Shooting Foundation (NSSF), the firearm industry’s trade association, published a release entitled “Viral Run on Guns Shows America Wants Firearms” and its senior vice president, Larry Keane, wrote, “The industry has been busy keeping up with demand. Manufacturers are working diligently to meet orders and keep shelves stocked. By anyone’s estimate, that’s been difficult.”⁸ In another release in January, the NSSF’s Joe Bartozzi said 2020 “was truly a remarkable year for the industry across the board.”⁹ A Forbes article indicated that “gunmakers can barely keep up with demand” and that “sales have been booming since the start of the pandemic.”¹⁰ Similarly, several executives of publicly traded firearms companies made statements during earnings calls about the unprecedented strength of the market.

Sturm, Ruger & Company CEO Chris Killoy: “Well, in my 30 years plus in the industry, frankly, I think it’s different than what we’ve seen in some of the past demand surges, even in the run-up to the 1994 Assault Weapons Ban [and what] we saw in 2013. But again, this is, I think, stronger and fundamentally different in that [it] affects a wide variety of product categories.¹¹

Smith & Wesson CFO Deanna McPherson: “The ongoing heightened consumer demand, combined with our ability to increase our production capacity through use of our flexible manufacturing model, resulted in a second consecutive quarter of record revenue totaling $248.7 million, a $135 million increase or more than double the prior year results.”¹²

Vista Outdoor CEO Christopher Metz: “Vista Outdoor delivered outstanding results across the business in the second quarter, where we saw growing consumer demand for all of our key brands. Sales were up 29% year-over-year to $575 million, and gross profit was up 78% to $162 million. Our Shooting Sports segment was up 26% year-over-year to $380 million….”¹³

Less established manufacturers in niche markets also experienced rising demand. This includes the manufacturers of ghost gun parts and kits, do-it-yourself, homemade guns made from easy-to-get, unregulated building blocks. While a ghost gun manufacturer provides the parts and the instructions on how to assemble them, these guns are finished by an individual, not a federally licensed manufacturer or importer. The lack of regulation and background checks on such sales have raised alarm bells throughout the country. Everytown’s research shows that throughout the COVID-19 pandemic, ghost gun manufacturers and distributors have enjoyed “exceptionally high demand,” with dozens of companies reporting shipping delays. And even among those companies that did not explicitly warn customers about delays, “almost all of these sellers said they were dealing with shortages in inventory, indicating they were also experiencing an increase in demand during the pandemic.”¹⁴

The Gun Industry Receives “Essential” Designation, Allowing Many Businesses to Stay Open During COVID Lockdowns

As many industries faced economic hardship caused by COVID-19 lockdown orders, the firearms industry lobbied for, and received, a designation from the federal government that it was an “essential business.” This effort was reportedly led by the NSSF and involved extensive lobbying throughout the executive branch of the federal government.¹⁵ The NSSF later took credit for their “quick” action, noting, “When the rest of America was shutting down, NSSF’s team made sure gun manufacturers, distributors, retailers and ranges weren’t forced to close their doors.”¹⁶ Ultimately, just weeks into the pandemic, the Department of Homeland Security’s “Advisory Memorandum on Identification of Essential Critical Infrastructure Workers” was revised to add those “workers supporting the operation of firearm or ammunition product manufacturers, retailers, importers, distributors, and shooting ranges” to the list of essential workers.¹⁷

While not every state followed the federal government’s guidance, the majority of states allowed businesses in the firearms industry to continue operations in some capacity.¹⁸ The result was that the firearms industry, taken as whole, appears to have experienced less financial pressure in 2020 from COVID-19 lockdown orders than other similarly situated industries. Or, as one firearms industry report described it, “One of the reasons why [gun and ammunition] sales have skyrocketed is the virtue of industry businesses remaining open through the pandemic.”¹⁹

The Paycheck Protection Program (PPP) was created with the purpose of assisting businesses in keeping their workforce employed during the pandemic. With this program, the federal government provides low-interest (1 percent) loans to businesses, but if the recipient meets certain criteria, including not reducing its payroll and using at least 60 percent of the funds for payroll expenses, the loan is forgiven and effectively converted to a grant. Former Treasury Secretary Steve Mnuchin lauded the PPP, saying the program was “saving millions of Americans jobs and helping small businesses get through this challenging time.”²⁰ Republican Senate leader Mitch McConnell said, “We couldn’t just let every storefront except the biggest corporate retailers turn into permanent pandemic ghost towns. We had to give small businesses and their workers a fighting chance.”²¹

However, despite a record year in sales and demand, the firearms industry received extensive support from the PPP in 2020. Everytown reviewed the data made available by the Small Business Administration²² for the first tranche of funding released under the Trump Administration and identified 1,871 firearms-related businesses and organizations that received PPP funds from the federal government, totaling $156.9 million. Gun manufacturers, importers, and distributors took more than half of that total amount, netting $82.9 million across some 285 businesses.

The largest firearm manufacturing recipient of PPP funds was Kimber Manufacturing, a producer of pistols and rifles. The company received $7.1 million from the program. Other top recipients included firearm accessories and parts distributor Brownells at $5 million; Taurus Holdings, which manufactures and imports a wide range of handguns, at $3 million; and Daniel Defense, which specializes in AR-platform weapons, at $3 million. Wilson Combat, a company that builds custom-grade firearms costing thousands of dollars, received $1.8 million—the same amount given to Barrett Firearms, which is known for its large-caliber rifles and U.S. military contracts. SilencerCo, a silencer manufacturer, received $1.6 million, and Century Arms, a manufacturer and importer with a heavy focus on AK-style firearms, received $1.6 million.

Top Ten Recipients of PPP Funds in the Gun Industry

Loan Amount	Business	State
$7,133,500	Kimber Manufacturing	New York
$5,018,600	Brownells Inc.	Iowa
$3,076,600	Taurus Holdings	Georgia
$3,067,000	Daniel Defense	Georgia
$1,844,002	Wilson Combat	Arkansas
$1,829,400	Barrett Firearms	Tennessee
$1,662,600	SilencerCo	Utah
$1,631,500	Century Arms	Florida
$1,557,300	Lipsey’s	Louisiana
$1,479,938	Abrams Airborne (Vltor/Milkor USA)	Arizona

Several “ghost gun” manufacturers and distributors that sell untraceable firearms components without serial numbers also received support from the PPP. Everytown’s analysis of PPP data identified 19 companies that offer ghost gun components, or “80-percent” frames and receivers, for an aggregate of over $8 million in PPP funds. This includes one of the largest sellers of ghost gun parts and kits, Polymer80, a company that was recently raided by the ATF based on the suspicion it was illegally manufacturing and distributing guns.²³ Polymer80 is already facing a number of lawsuits for its role in producing guns that end up at crime scenes, and in June 2020, Washington, D.C., Attorney General Karl A. Racine, sued the company, stating that “more than 80 percent of the 250 ghost guns recovered by District law enforcement since 2017 were made by Polymer80, including guns linked to nine homicides.”²⁴ More recently, the Los Angeles City Attorney filed suit against Polymer80, as “more than 700 ghost guns seized in Los Angeles last year were made from parts bought from that company.”²⁵

A number of organizations and businesses affiliated with the NRA also received PPP funds. This includes official NRA state affiliates in California, New Jersey, and Texas, in addition to the businesses of NRA board members Ronnie Barrett, Buz Mills, and Bob Nosler.²⁶

Further, longtime NRA fundraising consultant Membership Marketing Partners (MMP) received $464,000 from the PPP, even listing the NRA headquarters as its business address. Ackerman McQueen, the NRA’s former public relations firm for over three decades and inventor of the failed NRATV venture, received $2.9 million from the PPP. The NRA, who reportedly had extensive layoffs in 2020 and filed for Chapter 11 bankruptcy in January 2021, did not receive PPP funds in 2020. 501(c)(4) organizations like the NRA are not eligible for PPP loans.²⁷ However, the NRA did report on federal lobbying disclosure forms that it lobbied on the PPP bill in Congress, although no details were provided as to what provisions the NRA was attempting to have included or excluded from the bill.²⁸

To access PPP funds, applicants were required to certify that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”²⁹ The program was a lifeline to many small and medium-sized businesses impacted by the economic downturn caused by the COVID-19 pandemic, although cases of alleged fraud have emerged.³⁰

While the program undoubtedly provided support to any number of struggling businesses, contemporaneous statements from several businesses in the gun industry — an industry enjoying a record year in 2020 — raises questions as to whether certain gun companies needed government funds to support their operations. The importance of these questions is heightened since the program envisions the federal government forgiving the PPP loan, essentially turning the money into a direct grant, if the applying business meets certain criteria about not laying off employees (a likely outcome for many in the gun industry, who to due to high demand in 2020, looked to add, not shed, workers). More than $23.1 million, or nearly 15 percent of the money delivered to the gun industry, went to companies who either reported the loan would save zero jobs or did not report how many jobs it would save. Several examples are provided below.

Brownells Inc.

Iowa-based Brownells Inc. is a large and politically-connected firearms and accessories retailer. The company’s chairman, Pete Brownell, was a former board president of the NRA who resigned from the organization’s board amid public scrutiny concerning an NRA-sponsored trip to Russia.³¹ Shortly after he left the NRA board, an entity owned by Pete Brownell purchased AR15.com,³² a web forum which so often traffics in misogyny, hate speech, and threats of armed rebellion that its domain host booted it from its platform after the January 6, 2021, Capitol insurrection.³³

Despite this federal assistance, Brownells routinely bragged about the strength of its business in 2020 and the positive impact of the COVID-19 pandemic on sales. During a November 2020 podcast, Pete Brownell stated “This market is exponentially larger than the Obama market.”³⁴ He later added, “We’ll sell a million rounds [of 9mm ammo] in about two hours because the backlog is so big, the demand is so big on certain calibers. It’ll be huge…and that’s the last couple of months, not just the last three or four weeks.”³⁵ Brownell concluded, saying, “I think the whole industry frankly got a lifesaver from the Trump dip that happened, and I think everybody’s kind of stepped up to try to serve the customer very well across the industry.”³⁶ Similarly, Pete Brownell told Fox Business in August 2020 that the industry recorded a 90-percent spike in firearms sales since the onset of the pandemic and that “We could receive truckloads of nine-millimeter [and] we can sell it in hours where it used to take weeks—weeks to a month.”³⁷ Brownells’ director of content and communications also told the NRA’s Shooting Illustrated that “it’s not uncommon for us to sell out of common calibers within minutes to hours once it’s live on Brownells.com.”³⁸

Furthermore, Brownells’ social media accounts pumped out various posts about the strength of the firearms market and the record number of NICS background checks.

Wilson Combat

Wilson Combat of Berryville, Arkansas, is a manufacturer specializing in custom-grade 1911-style pistols, AR-15s, AR-10s, and shotguns that cost thousands of dollars. However, a March 20, 2020 Instagram post containing a message from the company’s president, Bill Wilson, raises questions as to the negative impact of the COVID-19 pandemic on the company’s business. Specifically, Wilson wrote that “throughout the Nationwide Coronavirus outbreak, our Berryville, AR manufacturing and service facility has remained open, fully staffed and fully operational. We have a steady supply of merchandise being produced and there has been minimal disruption to production at our facility.” He added that the company is facing “increased demand” in the market and is “working diligently to process all orders in a timely fashion.”³⁹

On top of that, at the end of 2020, the company announced that it plans to increase its workforce by 20 percent and expand its production facility by 16,000 square feet.⁴⁰ The company’s director of manufacturing, in an article announcing the expansion, said demand for firearms and parts had been high, noting “demand is overwhelming across the country.”⁴¹

Daniel Defense

Daniel Defense is a firearms manufacturer that specializes in AR-15s, AR-10s, and bolt-action rifles, all marketed toward tactical and hunting audiences. The company is headquartered in Black Creek, Georgia, and it has another production facility in Ridgeland, South Carolina. However, in a March 27, 2020 Facebook post, the company stated, “We are fully operational!”⁴²

Furthermore, Daniel Defense unveiled a new merchandise line and e-commerce store in May 2020, and in September, the company debuted a brand-new rifle series. Daniel Defense also continues to raffle off guns through its social media accounts, and its website — as of February 2021 — shows almost all of its products as “out of stock,” denoting exceptional demand.

Polymer80

Polymer80 specializes in “80-percent” frames and receivers that allow people to create untraceable homemade pistols and AR-platform rifles without serial numbers and without background checks. The company also has offered complete pistols and “Buy Build Shoot” kits that, as mentioned supra, have earned increased scrutiny from law enforcement.

The pandemic appears to have created significant demand among DIY gun makers, who profile their “Anti-Virus P80” and “Second Pandemic” builds on websites like Reddit. Across the 102 “ghost gun” distributors identified by Everytown, only 40 percent of all unserialized parts listed for sale were actually in stock (as of November 4, 2020). And 65 of those companies (or 63.7 percent) specifically sell Polymer80 parts and kits. In the comment section of a July 4, 2020 Facebook post, the company mentioned that it’s working hard to “satisfy a massive amount of retailer orders.”⁴³

And in a September 18, 2020 Facebook post, the company again refers to the “overwhelmingly high demand.”⁴⁴

Nosler Inc.

Nosler, Inc. is a manufacturer of guns and ammunition that received a PPP loan in 2020. Yet the company appeared to be doing quite well in 2020, as evidenced by social media posts boasting that “the bullet business is booming” and attempting to hire additional employees.⁴⁵ Further, the company’s homepage recently featured a statement regarding current “unprecedented demand” and that products are “being shipped… very consistently.”

CZ-USA

Česká Zbrojovka (known as “CZ”) is a gun manufacturer based in the Czech Republic with an American branch, CZ-USA, located in Kansas City, Kansas.

CZ-USA applied for and accepted a PPP loan in the amount of $1,454,800. But months after receiving government assistance, CZ-USA announced that it was in the process of acquiring American firearms producer Colt Manufacturing Company, as well as a Canadian subsidiary, for $220 million in cash and $18.65 million in stock. CZ projects that its combined holdings would “substantially expand its global customer base” and earn “more than $500 million” in revenue.⁴⁶ A purchase and acquisition of this significance — in the same year the company applied for government assistance — raises serious questions as to whether CZ-USA required PPP funds in the first place.

Big Woods Goods

Big Woods Goods is a gun shop in Canton, Georgia, where the perpetrator of the March 16, 2021 Atlanta mass shooting purchased his weapon. The store’s Facebook page contains several indicia of the surging demand seen throughout the industry (e.g., “in stock while supplies last!”; “in stock!”; “limited quantities”). In fact, the day after the tragic mass shooting in Atlanta, Big Woods Goods advertised “Glock 9mm handgun in stock!” – the same type of gun used in the shooting the day before.

Other social media posts raise serious questions about the business, ranging from use of armed young children, a post featuring an Islamophobic dog whistle, and a video parodying how customers could circumvent ATF regulations concerning short-barreled rifles.

The PPP serves as an important tool for policymakers to assist struggling small and medium-sized businesses throughout the United States during the COVID-19 pandemic. But in stark contrast to shuttered restaurants and retail shops facing plummeting sales, the firearms industry thrived during the pandemic, with several companies and organizations tripping over themselves to announce record demand and sales. Yet significant segments of the firearms industry applied for, and received, millions of dollars in federal assistance. This raises important questions for those entrusted with overseeing the PPP and detecting fraud against the government and taxpayers around the country, especially considering a second round of loans was approved in December 2020.

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The Firearms Industry and the Paycheck Protection Program

Executive Summary

The Firearms Industry Enjoyed Strong Demand in 2020

An Unprecedented Surge in NICS Background Checks During the COVID-19 Pandemic

The Industry Boasts About its Strong Year

The Gun Industry Receives “Essential” Designation, Allowing Many Businesses to Stay Open During COVID Lockdowns

Paycheck Protection for the Firearms Industry

Top Ten Recipients of PPP Funds in the Gun Industry

Market Conditions Raise Questions About Certain PPP Loans to the Firearms Industry

Brownells Inc.

Wilson Combat

Daniel Defense

Polymer80

Nosler Inc.

CZ-USA

Big Woods Goods

Conclusion

Explore more:

Executive Summary

The Firearms Industry Enjoyed Strong Demand in 2020

An Unprecedented Surge in NICS Background Checks During the COVID-19 Pandemic

The Industry Boasts About its Strong Year

The Gun Industry Receives “Essential” Designation, Allowing Many Businesses to Stay Open During COVID Lockdowns

Paycheck Protection for the Firearms Industry

Top Ten Recipients of PPP Funds in the Gun Industry

Market Conditions Raise Questions About Certain PPP Loans to the Firearms Industry

Brownells Inc.

Wilson Combat

Daniel Defense

Polymer80

Nosler Inc.

CZ-USA

Big Woods Goods

Conclusion

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