Through loopholes and lack of oversight, taxpayer money that was meant to keep small businesses afloat and their workers on payroll, prioritized the rich and left vulnerable communities behind.
Here’s what we know.
THE PAYCHECK PROTECTION PROGRAM FAILED.
First, some background…
The Paycheck Protection Program, or PPP, was a low-interest loan program from the Small Business Administration. The specific intent, as stated on the SBA website, was to help businesses with fewer than 500 employees keep their workforce employed during the coronavirus crisis. Loans could be forgiven if they were spent on payroll, rent, mortgages, and/or utilities.
But here’s where the money went instead….
Millions of dollars have gone to Trump-connected businesses.
Businesses at properties owned by the Trump Organization and Kushner Companies received over $3.65 million dollars in total PPP funding and were required to spend some of their loans on rent. Startups tied to Jared Kushner’s brother, Josh, received at least $2.8 million.
Businesses owned by celebrities were given millions.
Recipients include actors Mark Wahlberg and Ryan Gosling, musicians Jay Z and Kanye West, YouTubers Jake Paul and Jeffree Star, and the stars of Netflix reality show Selling Sunset.
Loopholes allowed large businesses in the food and hospitality industries to receive loans.
Businesses with more than one location – including huge chains – could apply for PPP loans up to 2.5 months payroll as long as each location had a number of employees that qualifies as a “small business.” Chain restaurants like T.G.I. Friday’s, Chop’t, P.F. Chang’s and Shake Shack all were approved for millions in PPP loans.
Well over 1,000 publicly traded companies – many of whom would go on to report strong earnings in the second quarter of 2020 – had taken in over $2.2 billion in PPP funds.
…And funds were distributed inequitably.
Ultimately, more than half of the roughly $525 billion in loans doled out through November went to just 5% of the more than 5 million recipients.
Source: The Washington Post
“There are more than 6,000 minority-owned businesses in Arizona. Imagine how many families depend on those small businesses… Without support, businesses will suffer. Our leaders need to support the people working hard to stay afloat.”
– Eduardo Gonzalez, Señor Sushi
Arizona
Source: Main Street Alliance
What about the small business owners and workers who truly needed the funds?
Despite its original intent to save jobs, the Paycheck Protection Program left workers behind.
When Congress passed new changes to the Paycheck Protection Program in June, it gave permission for businesses to use the money for purposes other than paying their workers – dropping the requirement to spend the loan on payroll down to 60%.
“This impacts the whole community. If I close my business, I won’t just lose my employees. My employees also lose their ability to take care of their families.”
– Manolo Betancur, Manolo’s Bakery
North Carolina
Source: Main Street Alliance
Up to 90% of businesses owned by people of color or women were shut out of the Paycheck Protection Program.
One study indicated that only 12-percent of Black and Latino business owners who applied for SBA relief have received what they asked for and 26% said they “received only a fraction of what they had requested.”
“As a newer business, the PPP was not designed to support us and we were discouraged to try. Without the “right relationships” it felt like I was hitting barrier after barrier.”
– Kimberly Douglas, FLOW Film Festival
Florida
Source: Main Street Alliance
Poor design and mismanagement made the PPP particularly vulnerable to fraud, wasting potentially over a billion of taxpayer dollars.
https://www.youtube.com/watch?v=P_yqBdTqch0&feature=youtu.be
There’s a lot the Trump administration didn’t want us to know about this program.
For the first half of the program, the Treasury Department released only topline information on distributed loans after heated calls from the public and Congress. At one point in their refusal to disclose the public information, Treasury Secretary Mnuchin and the Trump administration called the data “proprietary.”
Only after nearly six months and a court order was all the data been made public.
There’s a lot the Trump administration didn’t want us to know about this program.
For the first half of the program, the Treasury Department released only topline information on distributed loans after heated calls from the public and Congress. At one point in their refusal to disclose the public information, Treasury Secretary Mnuchin and the Trump administration called the data “proprietary.”
Only after nearly six months and a court order was all the data been made public.
A September report from the House Subcommittee on the Coronavirus Crisis found a number of failures, including:
- The SBA and the U.S. Treasury Dept. approved hundreds of PPP applications that had “incomplete or missing identifying information,” including “missing names and addresses.”
- Nearly 11,000 PPP loans totaling over $1 billion went to borrowers receiving multiple loans despite SBA guidance stating, “‘individual business entities cannot apply for more than one loan’ under PPP.”
- Government contractors that had been “previously flagged by the federal government for performance or integrity issues” received 353 PPP loans valued at approximately $195 million.
https://www.youtube.com/watch?v=DD3mCysPn5w&feature=youtu.be
Months later, we’re still learning the full extent of the mismanagement and fraudulent loans handed out under the Paycheck Protection Program.
The Trump administration must be held accountable for the poor design and implementation of a program that left many of the small businesses it was intended to help behind.
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