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Latest PPP Data Raises Questions About the Distribution of Loans
Signs of mismanagement and questions of fraud led to months of litigation to reveal the data behind the Paycheck Protection Program. Claims from the Trump administration stated that exposing this information would be a privacy violation, though a judge ruled in favor of the news organizations seeking this data under the Freedom of Information Act.
[ Read: The Best Small Business Loans ]
Tuesday night, the Small Business Administration released the most accurate data set of Paycheck Protection Program (PPP) and Economic Injury Disaster (EIDL) loan recipients to date. An NBC News analysis unearthed some serious questions about how the $700 billion in forgivable loans were distributed. More questions were raised when it was revealed that properties directly owned by President Trump and son-in-law Jared Kushner’s family profited from these relief programs.
Instances of fraud were found
Here are the key findings from the report:
- Only 5% of the 5 million recipients received a loan from the $525 million distributed in November.
- At least $1 billion of PPP loans were given to ineligible businesses.
- Trump and Kushner real estate properties were given 25 PPP loans that totaled to around $4 million. 15 of the properties self-reported only keeping one job, no jobs or would not disclose an exact number.
- Included was a $2,164,543 loan to Triomphe Restaurant Corp — located in the Trump International Hotel/Trump Tower in New York City. It was reported that this money was not used for job retention.
- A $505,522.50 loan used to save 155 jobs was given to LB City Inc, a company located in Kushner’s Bungalow Hotel.
- More than $100,000 went to two tenants of Trump Tower; only three jobs were kept.
- Over 100 loans were made out to companies listed as “no name available.”
The PPP was designed to help businesses cover payroll, rent and other allowable expenses during the pandemic lockdowns. Regulations were set in place to limit businesses to $10 million per entity — but we now know that more than 300 companies received more than that through subsidiaries.
The SBA has stated that their normal level of restrictions was relaxed in an effort to get funds to small businesses as quickly as possible, which has proven to open the program up to considerable fraud. Up to 46% of EIDL loans were “susceptible to fraud,” according to an October report from The Office of Inspector General for the SBA.
What does this mean for the next stimulus package?
Troubling signs of mismanagement don’t instill confidence for how the upcoming stimulus will be handled. The SBA has previously stated that 87% of the Covid relief loans were given to struggling small businesses. We now know that around 600 large companies were granted the maximum loan amount, which ultimately came at the expense of other businesses.
By September, 97,966 small businesses had closed permanently. While the SBA has defended how the situation was handled, all we can hope is that the newfound transparency will shed more light on future recipients of these loans.
COVID-19 and your small business
See the articles below for more resources.
- Where to Find Financial Relief During Coronavirus (COVID-19)
- How To Get Help With Your Taxes While Social Distancing
- The Small Business Guide to SBA Loans
- The Best Small Business Loans for Women
- Microloans: Small Loans for Small Businesses
- What to Do If Your Small Business Isn’t Insured for COVID-19
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