This week, the Small Business Administration (SBA) released a full list of the 4.9 million Paycheck Protection Program (PPP) loans given out since the CARES Act was passed in March 2020. The PPP was part of a government effort to help small businesses and their employees weather the economic uncertainties of the COVID-19 pandemic.
Since the list of loan recipients was released on Monday, it has been scoured by interested parties. Reviews of the list have found that many politicians and their associates, including President Donald Trump, have been PPP recipients. Yet, despite the appearance of conflicts of interest, the program appears to have largely been a success.
Release of Paycheck Protection Program data
Originally, the SBA and the Treasury Department, which worked together to oversee the PPP, said that they would not disclose the recipients of the program. However, after a public backlash accused the agencies of lacking transparency, they reversed their decision in mid-June, agreeing to disclose which businesses received loans of US$150,000 or more, roughly 75% of the recipients.
The Treasury Department published a press release on Monday announcing the release of the information. Included in the data are “business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, name of lender, jobs supported, and loan amount ranges.”
As of June 30, the program had given out US$521.5 million across 4,885,388 loans. The average loan size was US$107,000 and 86.5% of the loans were for less than US$150,000.
Politicians receiving loans
Among the millions of loans given out through the PPP, some recipients were notable for their connection to the politicians who helped craft the legislation. As Time Magazine has reported, many recipients were associates of Trump, as well as business partners of the Trump Organization.
The most direct Trump connection is loans given to an affiliate of Kushner Companies, which is owned by the family of Trump’s son-in-law, Jared Kushner. The affiliate, Princeton Forrestal LLC, owns the Princeton Marriott Hotel in New Jersey and received between US$1-2 million.
Meanwhile, CloudCommerce, a company whose largest shareholder is Brad Parscale, received nearly US$800,000 in loans. Parscale serves as campaign manager for Trump’s reelection campaign.
Slightly outside Trump’s immediate circle, a loan of between US$350,000 and $1 million was given to Foremost Group. That New York shipping company is run by the family of US Transportation Secretary Elaine Chao, who was nominated by Trump. Chao is also the wife of Senate Majority Leader Mitch McConnell.
Paul Pelosi, the husband of Speaker of the House Nancy Pelosi, also has a link to EDI Associates, a company that received a US$350,000 to $1 million loan. Pelosi disclosed in 2018 that he has an 8.1% stake in the San Rafael, California-based company
Politicians who voted on the CARES Act that directly received PPP loans include California Rep. Devin Nunes (for wineries), Pennsylvania Rep. Mike Kelly (for car dealerships), Oklahoma Rep. Markwayne Mullin (for plumbing and contracting firms) and Georgia Rep. Rick Allen (for a construction company).
The program is working
In the days since the loan list was released, people have combed it for notable recipients. Some of the more eyebrow-raising names are Kanye West (for his Yeezy fashion company), the Burning Man Project, which oversees the Burning Man festival, the Libertarian-friendly Ayn Rand Institute and the fast-food chain Shake Shack, which returned the loan.
Those loans, alongside the politicians receiving money, have led some to voice concern that the program has been abused.
Writing for The Atlantic, David Graham argues that, in fact, the program has worked exceptionally well. The issue is not who received loans, but the fact that not enough money was set aside for the program. Graham states that “The government’s ability to spend in this situation is really only constrained by its own imagination.”
Graham concedes that Congress could have worked on the legislation to narrow who could sign up for it. That would have helped reduce the hypothetical abuse of the program. However, the time necessary to craft such exacting language would have unnecessarily slowed down the stimulus package, he says, hurting those who needed it most.
Still, the program has not been a complete success. For one thing, it has struggled to help minority-owned businesses.
As reported by NPR in May, the PPP was intended to prioritize businesses owned by people of color. This was a stipulation inserted in the language of the CARES Act.
Yet, while the SBA was supposed to instruct lenders to give priority to businesses in “underserved” communities (specifically those of minorities), such instructions were not given and many minority-owned companies were overlooked.
What is the Paycheck Protection Program?
The PPP was initially passed with the CARES Act in late March. In addition to providing money to small businesses, the CARES Act included the distribution of stimulus checks of up to US$1,200 to every eligible US citizen.
The PPP was designed to help small businesses pay up to eight weeks of payroll costs. Even if the owners of the companies are politicians or wealthy celebrities, the money is designed to go to workers in need.
Though the PPP loans accrue interest from the time businesses receive them, the debt will be forgiven if the recipients use the money for designated purposes, including payroll, mortgage interest, office rent and utilities.
Unfortunately, even though Congress set aside US$350 million of the US$2 trillion stimulus package for the PPP program, by early April it was already abundantly clear that amount wouldn’t be sufficient.
For a time, US legislatures were locked into a debate of how to best inject more money into the program. Eventually they settled on an additional US$320 million.
At the beginning of July, Trump signed a bill that extended the deadline for the PPP so more small businesses could take advantage of it.
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