Confirm our fears about the PPP
The new data confirmed this we had feared for a long time: One of the government’s main efforts to keep Americans afloat during the pandemic-induced economic downturn has favored larger, richer companies over smaller companies with fewer relief options. Preliminary data suggested this picture, but it was only now that a full analysis was possible.
The larger the applicant, the faster the relief
This new information on the Paycheck Protection Program revealed surprising details about the extent to which large businesses benefited from the program, which was intended to help small businesses and disadvantaged businesses that would otherwise not have easy access. in the capial.
About 600 companies, including several powerful law firms and dozens of national restaurant chains, received the maximum loan amount of $ 10 million, according to the New York Times. And NBC News found that more than 300 companies managed to exceed the maximum of $ 10 million through affiliates, although only franchises and certain companies in the food and hospitality sectors were allowed to exceed the ceiling.
Not only did the big companies rush in and get bigger loans, they got their money faster.
In October, the Special House Subcommittee on the Coronavirus Crisis found that “many large banks have failed to prioritize small businesses in underserved markets, including minority and women-owned businesses,” in part because the Treasury Department “said in private lenders to “address their existing customers” when issuing PPP loans “. The subcommittee also found that several lenders, including JPMorgan and PNC Bank, processed larger loans for their wealthier clients much faster than smaller loans for small businesses.
With the new data available, the Center for Public Integrity found that three-quarters of loans over $ 1 million were issued in the first two weeks of the program, while nearly three-quarters of loans under $ 50,000 were issued for only several weeks or several months. Clearly, large companies have been allowed to step into the front line of the pandemic relief line, while smaller, more needy companies have had to wait.
Loans for Buddies, Scammers and Campaign Contributors
Unsurprisingly, the new data revealed particularly outrageous examples.
NBC News found that tenants at properties owned by the Trump Organization and Kushner Companies received more than $ 3.65 million in PPP loans, which they may have used to pay rent. What is more, 15 of those beneficiaries said they planned to save a job, no jobs, or did not report any number. The Trump organization was specifically prohibited receive pandemic relief funds, but still ultimately appears to have benefited. It’s just another stark reminder of what can happen when a president refuses to completely divest himself of his trading holdings when taking office.
Local media are also making disturbing findings. the Atlanta Journal-Constitution found that a local company accused by several states of illegally selling health insurance received a loan worth almost $ 6.1 million, and another Georgian company received a loan of almost $ 150 $ 000 just two years after coming to an agreement with the state for allegedly breaking debt collection laws.
the Journal-Constitution was also able to identify the exact amount of several loans granted to companies linked to local politicians or allies of President Donald Trump.
It reminds me of two concerns of Project On Government Oversight (POGO) and other government watchdogs: Do some lawmakers have unduly profit the program they helped create? Did some loans involve a political counterpart?
POGO recently reported that a number of loan recipients have made significant political contributions after obtaining loans. With the help of the Anti-Corruption Data Collective, we found that at least 113 loan recipients or owners of these companies made federal campaign donations totaling $ 11.7 million after obtaining the loans. Beyond the appearance of possible corruption, these donations raise another fundamental question: Did these companies really need relief if they could afford to make such generous contributions?
How many jobs has the program saved and at what cost?
We still lack crucial data on the exact use of their PPP loans by companies. As Congress called on the government to collect information from loan recipients on how they spent the money, the Office of Management and Budget told federal agencies they didn’t need to do that. It is therefore difficult to say how effective the program has been, even with new data on small loans.
the Denver Post did an interesting analysis based on the number of jobs claimed by companies on their PPP applications that they would save. the To post finding small borrowers in Colorado would offer taxpayers a lot more bang for their buck in terms of job preservation.
Loan recipients valued at over $ 150,000 said they would save a job for every $ 12,364 borrowed, while smaller loan recipients said they would save a job for every $ 8,220 borrowed. As for borrowers who took more than $ 1 million in loans, every job they saved in Colorado costs taxpayers $ 14,039, while borrowers who took loans of $ 10,000 or less have saved every job at a cost of just $ 4,422.
Of course, some of the bigger borrowers may pay their employees more, and some might actually have saved more jobs than they originally anticipated. But the point is that we just don’t know. We don’t know how many jobs the program saved and which loans were the most profitable, all because the government largely neglected to collect this crucial data.
It is now clearer than ever that the government botched the paycheck protection program. If Congress allows a second round of the program, the government must do a better job of prioritizing small, women-owned and minority-owned businesses, and businesses that otherwise might not be able to afford to. get through the pandemic.
In the meantime, the government should refrain from forgive these loans automatically. We need to know if the beneficiaries really needed the loans and were using the money to help the workers. The government must correct the data errors and omissions. He must start collecting data of loan recipients on how they used the money. Only then will we fully understand whether this program has been effective, and this knowledge will help the government plan for future disasters.