SUMMARY
As part of the CARES act, Congress authorized $349 billion in forgivable loans designed to help small businesses keep their employees paid while they dealt with decreased demand and stay at home orders. The Paycheck Protection Program (PPP) was administered by Donald Trump’s Small Business Administration with an assist from the Treasury Department
The program was hastily set up and failed to reach many businesses in need, due to the incompetence of the administration in distributing the loans.
The PPP program was supposed to be a lifeline for small businesses, but Trump administration incompetence in running the program led to big business grabbing funding before small businesses. In the first set of loans 45% of the funds went to loans of more than $1 million
The sloppy administration of the PPP program meant that minority owned businesses had a particularly hard time receiving benefits. In fact, only 12 percent of minority owned businesses who applied received what they asked for in relief. A major reason was the decision to allow banks to disburse the loans. Many minority owned businesses are underbanked, and lacked the relationships with bankers that allowed other businesses to successfully apply for loans. Additionally, a higher percentage of minority owned businesses tend to be sole proprietorships, which faced struggles meeting the requirements for the program. The SBA inspector general found that the agency had failed to prioritize minority engagement, as required by law.
Several companies with ties to trump and his administration received tens of million in loans.
April 16: PPP Ran Out Of Money. According to Vox, “The Paycheck Protection Program (PPP), a new loan initiative aimed at helping small businesses weather the economic fallout from the coronavirus response, has already run out of money, according to a statement from the Small Business Administration. Lawmakers had allocated $349 billion to PPP as part of the $2 trillion stimulus bill that Congress passed in March, but these funds were ultimately far from sufficient to meet demand.” [Vox, 4/16/20]
Congress Approved $310 Billion In Additional Spending After Program Was Used Up In Two Weeks. According to Reuters, “The initial PPP funding was snapped up in less than two weeks. Congress has now approved an additional $310 billion and new loans will be issued again starting next week.” [Reuters, 4/24/20]
MI Business Owner Who Missed Out On First Round On PPP: “This Is Like Uncle Sam Taking A Big Bag Of Money And Throwing It Up In The Air.” ANCHOR: Many small business owners hope the process is different this time. They felt left behind the first time when more than 1.6 billion in loans were approved. REPORTER: Many for the small business loans went by fast leavening many small businesses to ask, what about me. The construction car sits parked, the door closed, and all 12 employees work from home. KEVIN THATCHER: We ended up laying off people and staff because we can’t, don’t have that funding anymore. REPORTER: The tale of small business woes during the coronavirus pandemic. Companies like Thatch Computer Consulting were banking on money from the Federal Governments’ $349 billion PPP. KEVIN THATCHER: Basically we were standing in line and applied as soon as it was released. REPORTER: That money quickly dried up. KEVIN THATCHER: This is like Uncle Sam taking a big bag of money and throwing it up in the air. REPORTER: Now denied owners wait for the second wave. KEVIN THATCHER: Fingers crossed we’re going to get a loan this time. [WILX (NBC),4/21/20]
WICU: Erie Business Owner Failed PPP Support: “We Had All The Paperwork Done Before They Opened Up The Applications We Submitted Day One And Within Eight Hours Of The Applications Being Open We Did Not Get The Loan.” REPORTER: Room 33 speakeasy on state street has been a downtown presence in Erie for the past 2 years. And like many small businesses in the area the coronavirus has turned every day into a fight to break even. Owner Rob Mahrt has already had to lay off half his staff. ROB MAHART: We've seen a significant decrease I'd say we're down about 50-60 percent. REPORTER: But it isn't just the loss of business that's the problem. Monthly expenses continue and with the loss of revenue, there is concern that the restaurant's future could be in jeopardy. Mahrt says he has been trying to apply for a Paycheck Protection Program loan to make up for lost funds but has had no success. He says it is frustrating to know the possible consequences of not being approved. ROB MAHART: We had all the paperwork done before they opened up the applications we submitted day one and within eight hours of the applications being open we did not get the loan. [WICU (NBC),4/22/20]
National Federation Of Independent Business Reported That Many Small Businesses Had To Go To Multiple Banks To Receive Loan Applications. Adam Temple, vice president of public affairs at the National Federation of Independent Business, told CNN that for the entire day, his group had been inundated with stories about small business owners who were struggling to find a bank that would accept their loan application. With some banks choosing not to process the loans or delaying their rollout, many business owners were forced to go to a new bank to get a loan, only to find the new bank had a requirement that businesses already had to be an existing customer.” [CNN 4/3/20]
Treasury Department Final Rules Issued Night Before Program Began Caused Banks To Move Slowly In Taking Applications. According to CBS News, “The biggest obstacle was that the Treasury Department issued final rules for the program only on Thursday evening, a banker said. ‘They said, 'Here are the rules, and you get 12 hours to start making loans,'’ said Huntley Garriott, president of Live Oak, which as of last year was the country's largest small business lender by dollars lent. Nonetheless, Live Oak said it was able to begin taking applications on Friday morning and that as of mid-afternoon about 1,400 of its 4,000 clients had applied for a Paycheck Protection loan.”[CBS News, 4/3/20]
Some Of The Largest Banks Refused To Accept Applications Until Small Business Administration Clarified Rules. According to CBS News, “For borrowers, the biggest hurdle was simply trying to figure out which banks were participating and accepting applications. On Friday morning, financial industry giants Citigroup, JPMorgan Chase and Wells Fargo said they were not taking applications until the government provides more guidance on the Small Business Administration program.” [CBS News, 4/3/20]
Banks Received No Guidance On Who Would Verify Businesses Met Guidelines To Turn Loans Into Grants. According to CBS News, “As part of the program, for example, businesses that meet certain guidelines — including continuing to pay their workers — will have the loans forgiven. But banks said it was not clear who would verify if a borrower has lived up to those requirements.” [CBS News, 4/3/20]
Banks Did Not Receive Guidance On How To Verify Number Of Employees. According to CBS News, “Trump administration officials also have not clarified how to count the employees of affiliated companies and if owners of multiple businesses should tally their combined employees in trying to stay under the small business lending cap.” [CBS News, 4/3/20]
Government Had Not Told Banks How Much They Would Receive. According to CBS News, “Meanwhile, individual banks say they haven't gotten any guidelines on how much of the $359 billion in loans will be doled out to each bank. A source close to the Treasury Department told CBS News that this is being worked out, but expressed doubt that loans would be issued as quickly as the agency — and business owners — hope, CBS News' Margaret Brennan reported.” CBS News, 4/3/20]
Small Business Owner Did Not Accept $200,000 Loan Because There Were “So Many Unknowns With The Federal Program.” According to CBS News, “Danny Schwartzman, the owner of Common Roots Cafe in Minneapolis, was approved for a more than $200,000 PPP loan, but decided not to accept it. The reason: Uncertainty over the criteria used to determine if a business qualifies for forgiveness under SBA rules, he said. ‘For businesses like mine, there are so many unknowns with the federal programs. The question was always how will forgiveness work for a business like mine that is very severely impacted by this crisis’ Schwartzman said. ‘The expectation was they'll figure it out and make the rules for forgiveness clear. But they didn't, and everyone had a different perspective on how forgiveness would work.’” [CBS News 5/1/20]
PA Businesses Struggle With PPP Applications: “It Was A Complete Nightmare.” ANCHOR: Frustrated, skeptical, and confused, those are the words Pittsburgh small business owners have used to describe their experience with the federal Paycheck Protection Program or PPP. [...] REPORTER: The owners of this small independent shop here say that they are a classic example of a small business. The White Whale bookstore, they have one full-time employee and three part-time employees, but now they say they are feeling deflated and come to find out, they are not the only ones. From Pittsburgh staple Wiggle Whiskey with 168 full-time employees. MEREDITH MEYER GRELLI: Currently, we employ closer to 40 so it would get us back to a normal staffing level. REPORTER: To a cozy Bloomfield bookstore, now operating out of a cramped bedroom.[...] Both businesses unable to secure a slice of the $349 billion pie of PPP emergency funding. Meredith Meier Grelli says Wiggle completed its application on day one but watched while it sat in virtual purgatory. MEREDITH MEYER GRELLI: It continued to be caught in this quagmire of computer glitches where we were asked to continue to answer the same question over and over again, which had been answered from the first round of our application. REPORTER: The federal loans aimed to help businesses keep employees on the payroll, pay rent, and utilities. Adlai Yeomans needed all of this and can't believe he came up empty-handed. ADLAI YEOMANS: It was a complete nightmare, the site kept crashing, stuff that you -- paperwork they were asking for, you would put it up, the site would crash, stuff wasn’t saved. REPORTER: Both Wiggle and White Whale Bookstore relied on PNC bank to push their applications onto the small business association. On its website, PNC now dedicates an entire page to the Paycheck Protection Program… PNC says in part that it will continue to, quote, work on PPP applications that have already been received so that they can be prepared to the extent possible, should the SBA begin accepting applications again. And the owners of both businesses tell me if and when more funding becomes available, they hope that their applications are cued up. They told me they definitely don't want to have to relive that experience again, especially if the online portal doesn't see an overhaul sometime soon. [KDKA-PIT (CBS), 4/20/20]
PA Businesses On PPP Program: “There’s No Communication... It’s Confusing... It’s Stressful, I Don’t Want To Let Anyone Down.” REPORTER: As small businesses grapple with the effects of the global pandemic, local small business owners are navigating their way through federal thundering and trying to keep businesses afloat and employees on the payroll. CHRIS WECK: One of my main people is a single parent with two kids. So I want to make sure I’m doing whatever I can to help them out. REPORTER: The government rolled out the 349 billion-dollar paycheck protection program but those funds have already dried up. now business owners, like Chris Weck who owns Sinful Sweets downtown, are left in the dark not knowing if they will get the funding or not. CHRIS WECK: There’s no communication, yah there’s not. There’s not even a confirmation email that, yah we’ve got your stuff. It’s confusing. It’s pretty crazy. REPORTER: Weck is one of the 1.6 million business owners who applied for the program, and so did Anna Austen who owns a spa. ANNA AUSTEN: I don’t like the loss of control I feel, and I don’t like sitting around waiting for government handouts. I don’t feel like a business owner that’s how we are wired. REPORTER: Austen laid off her 8 employees almost immediately after the shutdown and have been able to retain unemployment benefits. And she ended up getting approved for the federal grant EIDL, Economic Injury Disaster Loan. ANNA AUSTEN: As soon as I got that EIDL grant money, I told the bank yesterday to just cancel my application because I felt so bad that people run out of money. REPORTER: Now the business owners who are banking on these efforts are hoping there is enough out there to get them through. ANN AUSTEN: With the grant that I got, and unemployment coming to me, I can survive. but, without both of those, no. I can't. CHRIS WECK: It’s stressful I don’t want to let anyone down. I don’t want to let those who work for me down. I want to make sure they are taken care of and that their families are taken care of. [WPXI-PIT (NBC), 4/20/20]
WJFW: Rhinelander Local Businesses Unable To Access The PPP Program: “I Haven't Received Anything. No Help From Anybody… I'm At Home Worried To Death That My Business Is Not Going To Be Like It Was When All Of This Happened, If I Have A Business.” ANCHOR 1: The federal government designated roughly 20 percent of the nearly two billion dollar coronavirus cares act to small business loans. ANCHOR 2: That pool of money ran out last week, and plenty of northwoods entrepreneurs received no help. DIANE PILAT: I haven't received anything. No help from anybody. REPORTER: Diane Pilat and her husband Andy run best embroideries a small gift shop in downtown Rhinelander. They've been closed for almost a month. DIANE PILAT: I'm at home worried to death that my business is not going to be like it was when all of this happened, if I have a business. REPORTER:Pilat sought help through the Paycheck Protection Program, a pool of money set aside for small business relief in the federal stimulus bill. However, Pilat's loan never got approved. DIANE PILAT: I have nothing coming in. I've called all my loans and said "Im sorry”, the advertising people that I've done business with, I’ve had to call and tell them "I'm sorry I can't make this payment." REPORTER: The Paycheck Protection Program officially covers all small businesses, defined as any business that employs fewer than 500 people. This should include sole proprietors, but that hasn't always been in the case. TOM BARNETT: I've talked to several people that are in my position, who are sole proprietors, and we haven't seen or heard anything. REPORTER: Several other businesses in rhinelander have told similar stories of confusing guidelines and long delays, even when they received money. MARK GUTTERER: Just surviving this is going to be a very challenging thing. I'm afraid that there will be lots of small businesses that will not make it through this time. REPORTER: As for Pilat doesn't get help within the next month or two, she worries that she'll have to shut down Best Embroideries. DIANE PILAT: I would much rather be at work. working and making a living. I don't like getting handouts, per se. we all have to make money and we need an income to survive. when that gets taken away from us, it makes it really, really difficult. [WJFW, 4/20/20]
SBA Added Rule That Small Businesses That Receive Aid Must Spend 75% Of The Funds On Workers Despite Not Being Required In Law. According to CBS News, “In a report released on Friday, the SBA's inspector general faulted the agency for mandating that small businesses that receive aid must spend 75% of the funds on workers to qualify for forgiveness. That threshold is not stipulated in the Coronavirus Aid, Relief and Economic Security Act, which authorized the Paycheck program, but was added after the fact by the SBA.” [CBS News, 5/11/20]
Inspector General Found That Many Small Businesses Would Struggle To Meet 75% Level. According to CBS News, “In a report released on Friday, the SBA's inspector general faulted the agency for mandating that small businesses that receive aid must spend 75% of the funds on workers to qualify for forgiveness. That threshold is not stipulated in the Coronavirus Aid, Relief and Economic Security Act, which authorized the Paycheck program, but was added after the fact by the SBA.” [CBS News, 5/11/20]
Big Hotel And Restaurant Chains Remained Eligible for PPP Loans. According to CBS News, “Demand for the forgivable, low-interest loans through the Paycheck Protection Program remains intense, especially once the money started flowing again on Monday after Congress injected another $310 billion in funding. But bigger players, including publicly traded companies, can still access the PPP funds. Examples include: Hotels and restaurant chains — no matter their size — remain eligible for PPP loans. That's even after public scrutiny drove a number of prominent restaurant chains, including the owners of Ruth's Chris Steak House and Shake Shack, to return their loans of $20 million and $10 million, respectively. By contrast, hotel management chain Ashford has declined to return nearly $60 million it has already received through the program.” [CBS News, 4/29/20]
Loopholes Allowed Employers With More Than 500 Employees To Receive Loans. According to CBS News, “Many industries still qualify for special exemptions from the program's requirement that employers have no more than 500 workers. For example, kombucha bottler New Age Beverages, which has nearly 1,000 employees, got a nearly $7 million loan in the first round of PPP funding. Notably, it would still be eligible for the program because a loophole states soft drink makers can have as many as 1,250 employees and still qualify for a loan.” [CBS News, 4/29/20]
Ammunition Manufacturers Could Have Up To 1,500 Employees. According to CBS News, “The program is generally available to companies with 500 or fewer employees. But a number of industries got exceptions to that ceiling. Ammunition manufacturers, for instance, can have as many as 1,500 U.S. workers and still qualify for PPP funding.” [CBS News, 4/29/20]
Used Car Dealers Had No Employee Limit. According to CBS News, “Used car dealers have no employee limit so long as they don't exceed $27 million in annual sales. (It's not clear if this loophole helped AutoNation, with 350 dealerships and a total of $21 billion in total sales, receive nearly $80 million in PPP loans before the Fortune 500 company returned the money last week.).” [CBS News, 4/29/20]
Private Jet Charters Could Have Up To 1,500 Employees. According to CBS News, “Companies that specialize in chartering private jets are allowed to have as many as 1,500 employees and still qualify for a PPP loan. [CBS News, 4/29/20]
Boat Dealers Could Have Up to $35 Million in Sales And Receive PPP funds. According to CBS News, “Even the yacht business gets a loophole: Boat dealers may have as much as $35 million in annual sales and still qualify for the PPP program.” [CBS News, 4/29/20]
Manufacturers That Offshored Remained Eligible For PPP Loans. According to CBS News, “Manufacturers that have offshored production in recent years also remain eligible for the program. That's because PPP loans are based on the number of employees a company has the U.S., not businesses' larger global workforces.” [CBS News, 4/29/20]
PPP “Makes It Easier For Some Companies That Have Moved Jobs Overseas To Get Aid.” According to CBS News, “President Donald Trump has repeatedly berated companies that moved U.S. manufacturing jobs to other countries. But the Paycheck Protection Program actually makes it easier for some companies that have moved jobs overseas to get aid. And they are not always small companies. Culp, the largest domestic manufacturer of fabric for mattresses and other furniture, has nearly 1,500 employees. That would appear to size the company out of Paycheck Protection Program funds, yet the company landed a $7.6 million loan. The loophole: Many of Culp's employees are no longer in the U.S.” [CBS News, 4/29/20]
Banks Couldn’t Log On To Website To Apply For PPP Loans. According to the Charlotte Observer, “The Paycheck Protection Program (PPP) saw more than $300 billion in new funding for small businesses, but some bankers are having a hard time processing applications because of the high demand. Karin Bell, Senior Vice President for the small business administration at the Bank of Missouri, said ‘round two has been a slow start.’ ‘We couldn't log on,’ she said. ‘The normal community banks who are manually putting this stuff in couldn't.’ Bell said the website the bank uses to file applications shut down and is still currently shut down. She believes a change in how the system was accepting applications, as well as a high demand, caused the slowdown.” [KOMU 8, 4/28/20]
VIDEO: Slow Processing Times Plaguing Second Round Of PPP Loan Applications. [KOMU 8, 4/28/20]
Program Was Poor Fit For 40 Percent Of Small Businesses. According to CBS News, “David Audretsch, a professor of economics at Indiana University and co-editor of the journal Small Business Economics, estimates that the Paycheck program won't work for up to 40% of the country's 30 million small businesses.” [CBS News, 4/15/20]
Business That Were A Poor Fit Included Those Who Had Small Payrolls Or Employed Minimum Wage Or Contract Workers. According to CBS News, “While that sounds good in principle, the rules effectively force business owners to continue paying employees even when enterprises remain closed and unable to generate revenue. As a result, several kinds of small businesses are a poor fit for the lending initiative, owners say. They include: Businesses for which payroll is small portion of their overall expenses. Businesses that employ mostly minimum wage workers, who would be better off collecting the enhanced unemployment that is also part of the government's $2.2 trillion economic relief package. Businesses that rely on contract workers, which are excluded from payroll tallies in calculating Paycheck loans.” [CBS News, 4/15/20]
PPP Loans Have Strings Attached That “Might Strangle Many Small Businesses.” According to WCNC, “They finally got a loan in May, when more money was made available. But the PPP loans have strings attached, and it turns out those strings might strangle many small businesses.” [WCNC, 5/27/20]
Almost Twice As Many Establishments In Areas Least Affected Received Loans As Those In Most Affected Areas. According to NPR, “These reports from SBA aren't the only sources of information on what PPP is doing. Economists at the University of Chicago and MIT have taken a first stab at figuring out how well the program might be boosting local economies. In a new working paper, they compared employment data to PPP data as of April 15 — just before the first round of funding ran out. What they found: ‘Fifteen percent of establishments in the regions most affected by declines in hours worked and business shutdowns received PPP funding; in contrast, thirty percent of all establishments received PPP funding in the least affected regions,’ the authors wrote. This paper is just one early look at the program; further data on loan forgiveness, employment, and business survival, will better show PPP's effects. But it is an indication that the aid isn't targeting the places that need it most.” [NPR, 5/4/20]
Hard Hit Hospitality Industry Received Less Than 10 Percent Of Funds. According to NPR “In the first round, hotels and restaurants — which were among the hardest hit by layoffs — received only around 9% of the money.” [NPR, 5/4/20]
First Round Of Funding Favored Rural Areas That Backed Trump. According to Bloomberg, “The first round of coronavirus aid to small businesses was a boon to rural states that backed President Donald Trump but haven’t been hit as hard by the pandemic as Democratic strongholds on the coasts, contributing to rising political tensions over a multi-trillion-dollar relief effort. The skewed distribution doesn’t necessarily point to regional or political bias in the Paycheck Protection Program’s administration or design, which is first-come, first-served. In many cases, smaller lenders who have close relationships with small-town business owners played a outsized role in issuing loans by moving quickly to tap the program.” [Bloomberg, 4/29/20]
Fitness Chain CEO Expressed Concern Funds Would Not Last Long Enough. According to Boston 25 News, “‘Right now I’m under the gun,’ said David Dos Santos, CEO of Best Fitness, a small health club chain with locations in Massachusetts, New Hampshire and New York. Dos Santos was approved for PPP three weeks ago, but is worried that the funds will run out before business and revenue are at full capacity once the pandemic restrictions are lifted. ‘We're going to be in the same place in 10 weeks. We’ll have to lay everybody off because we won't have the money to keep them,’ he said, referring to the PPP rules that require the funds be used within a set time of approval.” [Boston 25 News, 5/8/20]
WCAU: Small Business Owner Candice Conway On Support From PPP: “No, I Haven't Even Gotten An Acknowledgment.” REPORTER: For some businesses that first round of protection money offered a lot of hope. A chance to get some funds, to keep people on their payroll. but there really was criticism that some larger businesses who maybe didn't have to shut down at all got access to that money while smaller ones didn't. [...] In Farimont the lights are off at Dessert Crazy. CANDICE CONWAY: I wish it was full of customers again. REPORTER: Candice Conway is the owner trying to figure out how to make that happen.CANDICE CONWAY: I’m going to hang on by my fingernails. We will re-open. REPORTER: she's among the business owners who tried to get money through the first round of the paycheck protection program but found frustration and confusion. CANDICE CONWAY: I contacted many banks, all of them said, no, not only do you have to be a current customer with us, but you have to have a loan with the bank. REPORTER: Even when she found one and filled out an application. CANDICE CONWAY: They say they sent it to the SBA, I’m not a 100% sure I believe them. [But you have not gotten any money?] No, I haven't even gotten an acknowledgment. [WCAU-PHI (NBC), 4/23/20]
NBC: PA Businesses Owner: “The Little Guys Still Flailing In The Wind Trying To Figure It Out.” REPORTER:Tonight, small businesses desperate for relief are going to have to keep waiting. Ron (?) has owned a jewelry store in Pennsylvania for 30 years. RON: we deferred a lot of our bills and our mortgages and our line of credit. REPORTER: By the time he applied for the paycheck protection program, the $350 billion fund for businesses with fewer than 500 employees had dried up. [...] The possible second wave of relief comes after several well-known restaurant chains got tens of millions of dollars from the loan program. including Ruth Chris, Pot Belly, and Shake Shack. They used this exception allowing them to apply because they had less than 500 workers per location. RON: They should have probably had different programs for different size businesses. the little guys still flailing in the wind trying to figure it out. [NBC: Nightly News With Lester Holt, 4/20/20]
Diner Owner Waited Over A Month After Applying With No News On Funds. According to Boston 25 News, “Diane Cohen, owner of the Minuteman Diner in Bedford, was among the first round of PPP applicants. Cohen, who is fighting to keep her business and dreams of owning her own diner alive, inaugurated the Minuteman Diner in January, just two months before the coronavirus outbreak forced restaurants to switch to take-out only. […] Cohen said she applied for PPP on April 5, two days after the program opened, through Bank of American where she has had accounts since 1993. More than a month later, she is still waiting for funds. A Bank of America spokesperson tells 25 Investigates applications are being reviewed and approved manually and the bank is processing more applications than any other bank.” [Boston 25 News, 5/8/20]
Paycheck Protection Program Had Second Round Of Funding After First Was Quickly Exhausted. According to the Charlotte Observer, “The loan program, known as the Paycheck Protection Program, offers small businesses forgivable loans to help them pay employees’ salaries and other bills during the coronavirus pandemic. The program, which opened in April, quickly exhausted $349 billion in initial funding and was replenished with $310 billion more last week.” [Charlotte Observer, 4/29/20]
Weeks Into Program, New Loans Had Slowed To A Trickle. According to CBS News, “The emergency funding flowing from a federal program that has distributed over $500 billion to small businesses affected by the coronavirus has slowed to a trickle. The volume of loans approved through the Small Business Administration's Paycheck Protection Program dropped 84% last week, to an average of roughly 52,000 loans a day, according to new SBA data. The previous week, the program was averaging 442,000 loan approvals a day.” [CBS News, 5/11/20]
One Lender, Bank Of America, Had Over 184,000 Applications Awaiting Approval From Small Business Administration. According to the Charlotte Observer, “Bank of America has 184,000 applications still waiting on small-business stimulus loans from the federal government after the second round of stimulus funding replenished the troubled program’s coffers. Those applications are awaiting processing and and approval from the Small Business Administration, according to an update provided by the bank with data through Tuesday morning. The bank has an additional 57,000 more it’s submitting through a slower manual process.” [Charlotte Observer, 4/29/20]
Electric Vehicle Manufacturer Had Not Received Loan 20 Days After Being Approved, Despite It Supposed To Have Taken Only 10. According to CBSLA “An Inland Empire business wants to know where their Payroll Protection Program money is after they applied and were approved last month. T3 Motion builds electric standup vehicles for law enforcement and private security. CEO William Tsumpes says they’ve kept all of their employees on payroll since the pandemic hit. Revenue is down due to COVID-19, so the company has been banking on a PPP loan. ‘All of our employees, whether they’ve worked or not worked, have been on full time payroll, even on absent days,’ Tsumpes said. A paper error kept them from securing a loan in the first round, but when round two opened up, T3 Motion got an email on April 30 saying they had been issued an SBA loan number. A day later, they got another email saying they should fund within one to two days – but then weeks passed. ‘Here we had an approved loan, we had signed the promissory note for the Treasury saying we were now responsible for the repayment of funds that we had yet to receive,’ said Tsumpes, adding he has yet to get an answer from Bank of America as to when the loan will fund. The U.S. Treasury Department requires lenders to pay out the loan within 10 calendar days. It’s now been 20.” [CBSLA, 5/20/20]
CBS News Headline: Paycheck Protection Program Out Of Money: Thousands Of Small Businesses Shut Out. [Headline – CBS News, 4/16/20]
Small Businesses Were Shut Out Of PPP As Large Companies Received Millions. According to Reuters, “Some large well-funded companies were granted millions of dollars from the $350 billion pool of funding, while many small, mom-and-pop shops were unable to access any funding at all, sparking public outrage.” [Reuters, 4/24/20]
First Tranche Of Funds Was Distributed In Such A Way As To Favor Big Business; Loans Of More Than $1 Million Made Up 45 Percent Of Dollars Disbursed. According to The New York Times, “The first tranche of money was distributed in a way that favored larger businesses, according to data from the Small Business Administration. Loans of more than $1 million made up just 4 percent of those approved, but they sucked up 45 percent of the dollars disbursed.” [New York Times, 4/22/20]
PA Business Owner On PPP: $349 Billion Disappears Quick In $10 Million Chunks.” JERROLD MELHORN:$349 billion disappears quickly in $10 million chunks. REPORTER: Small business owners in the Susquehanna Valley are among those out of luck as the paycheck protection program runs out of money. [WGAL-HAR (NBC), 4/18/20]
WJFW: Small Business Owner Kim Farrow On Big Companies Draining The PPP: “If They Already Have Enough Money To Sustain The Next 6 Months, Then Why Not Help All The Small Businesses That Don't Have The Funds?” REPORTER: And Who got that money is prompting outrage. While Kim Farrow's small construction business applied for loans at eight banks with no luck, major restaurant chains like Potbelly, Ruth's Chris Steakhouse and Shake Shack received a combined 40 million dollars. KIM FARROW: If they already have enough money to sustain the next 6 months, then why not help all the small businesses that don't have the funds? REPORTER: Today Shake Shack says it will return its 10 million dollar loan. [WJFW (NBC), 4/20/20]
Nations Biggest Banks Gave Priority To Biggest Customers And Private Banking Clients. According to the New York Times, That’s because some of the nation’s biggest banks, including JPMorgan Chase, Citibank and U.S. Bank, prioritized the applications of their wealthiest clients before turning to other loan seekers, according to half a dozen bank employees and financial industry executives who spoke on the condition of anonymity because they were not authorized to discuss the banks’ operations. Customers of Citi’s private bank, where the minimum account size is $25 million, didn’t have to use an online portal to apply for a loan; they could simply submit paperwork to their banker, who would put in an application on their behalf. At Chase, the nation’s largest bank, nearly all private and commercial banking clients who applied for a small-business loan got one, whereas only one out of every 15 retail banking customers who sought loans was successful. Some banks provided highly personalized, so-called concierge service to their richest clients by enlisting representatives to walk them through every step and submit their paperwork.” [New York Times, 4/22/20]
At JP Morgan Chase, The Largest Lender, Nearly All Commercial And Private Bank Companies Received Loans While Only 18,000 Of 300,000 Small Business Applicants Did. According to the New York Times, “At JPMorgan, nearly all of the 8,500 commercial and private banking clients who applied for a loan got one. That included companies like the sandwich chain Potbelly and the pharmaceutical company MannKind. At the same time, only 18,000 of more than 300,000 small-business banking customers who applied through Chase’s retail bank, where they normally did business, got loans, according to the bank. In all, Chase handed out $14 billion through the program — more than any other bank, but still less than half of the $36 billion that customers had sought.” [New York Times, 4/22/20]
Bank Of America (BAC), Wells Fargo, JP Morgan Chase And US Bank Were Sued For Favoring Big Customers. According to CNN, “Four of America's biggest banks have been accused of harming thousands of coronavirus-hit small businesses by unfairly prioritizing emergency loan requests from large customers to earn fatter fees. Bank of America (BAC), Wells Fargo, JPMorgan Chase and US Bank were sued Sunday for allegedly failing to process forgivable loans in the $349 billion Paycheck Protection Program (PPP) on a first-come first-served basis. Each bank ‘concealed from the public that it was reshuffling the PPP applications it received and prioritizing the applications that would make the bank the most money,’ each of the four lawsuits said.” [CNN, 4/21/20]
Trump Instructed Secretary Mnuchin To Open PPP Program To Big Businesses After Billionaire Restaurateur Tilman J. Fertitta Complained To Him. According to the New York Times, “When restaurant industry executives gathered at the White House this month, Tilman J. Fertitta pleaded with President Trump to let his chains of high-end eateries gain access to a government loan program meant for small businesses. Mr. Fertitta, the billionaire owner of the restaurant group Landry’s, told Mr. Trump it was unfair that he had to lay off 40,000 workers at his 600 restaurants only because they were employed by a larger corporation that was suddenly boxed out of the program amid public outrage over big companies getting bailouts. Mr. Trump turned to Treasury Secretary Steven Mnuchin, whose rule changes had excluded companies like Landry’s, which owns restaurants like Del Frisco’s Double Eagle Steakhouse and Morton’s Grille, to see if there was anything he could do to help.” [New York Times, 5/28/20]
At Least 15 Companies Receiving Funds Were Worth More Than $100 Million. According to NBC News, “At least 15 companies that reported receiving money under the program have stock market values of at least $100 million, according to a report from Morgan Stanley — even though Treasury Secretary Steven Mnuchin said Tuesday the program was not meant to benefit ‘big public companies that have access to capital.’” [NBC News, 4/24/20]
AutoNation, A Nationwide Chain Of Car Dealerships Received $80 Million That It Returned. According to Reuters, “AutoNation, the largest U.S. auto dealership chain, said on Friday it will return $77 million it received in forgivable loans from the U.S. Paycheck Protection Program (PPP) meant to help struggling small businesses and employees during the coronavirus outbreak.” [Reuters, 4/24/20]
Fox News Headline: “Stimulus Intended To Help Coronavirus-Ravaged Small Businesses Instead Rewarding Hedge Funds, Brokerages” [Headline – Fox News, 4/18/20]
Hedge Funds, Brokerages, And Law Firms All Were Eligible For PPP Loans. According to Fox News, “The bank was receiving applications not just from those barely solvent mom-and-pop businesses like restaurants, salons and family-run factories shuttered amid the nationwide pandemic shutdown that the legislation was supposed to help. Flowing into his system were applications from businesses no one would consider small, or even barely solvent: Midsized hedge funds, brokerage businesses, small law firms, all outfits that are making money, much of it through fee income, and many operating remotely almost as if nothing had changed.” [Fox News, 4/18/20]
Fox News: Money To Wall Street “Dwarfs The Stimulus Designed For Main Street Businesses.” According to Fox News “The banker says he spoke to FOX Business because he is concerned about the inequality gap involving the pandemic stimulus and the social unrest it could create. He said the spending being directed at Wall Street through various Federal Reserve programs as well as the hedge fund loophole in the loan program dwarfs the stimulus designed for Main Street businesses.” [Fox News, 4/18/20]
Fox News: As Traders Are “Feasting […] Mom-And-Pop Businesses Are Facing Reams Of Bureaucratic Red Tape.” According to Fox News “Dig deeper into the Main Street relief efforts and the inequality becomes even more glaring: As traders are feasting off of low borrowing costs thanks to the Fed, mom-and-pop businesses are facing reams of bureaucratic red tape to get a piece of a relatively small chunk of money, the $350 billion set aside for the payroll protection program.” [Fox News, 4/18/20]
LA Lakers Received $4.6 Million in PPP Loans. According to CBS News, “One of the richest National Basketball Association franchises got a $4.6 million loan from the federal Paycheck Protection Program but returned the funds, the team disclosed Monday. The Los Angeles Lakers, which Forbes estimates is worth $4.4 billion, said it qualified for the loan, which is geared to small businesses with a maximum of 500 workers. The team didn't specify what made the team eligible for the funds. Is the latest large organization to return the money allocated under the Small Business Administration program.” [CBS News, 4/27/20]
Lakes Repaid Loan After Public Outcry. According to CBS News, “‘Once we found out the funds from the program had been depleted, we repaid the loan so that financial support would be directed to those most in need,’ the Lakers said in statement. ‘The Lakers remain completely committed to supporting both our employees and our community.’” [CBS News, 4/27/20]
After Shake Shack And Ruth Chris Returned Loans, More Than Half Of Denny’s Franchises Received Loans. According to CBS News, “Although companies like Shake Shack and the owner of Ruth's Chris Steak House ended up returning their PPP money, others continue to borrow. Last week, for example, restaurant chain Denny's announced that franchisees that own more than half of its stores have received PPP loans, with more Denny's restaurants still waiting for funds.” [CBS News 5/1/20]
16 Percent Of Second Round Of PPP Funding Went To Loans Of More Than 2 Million. According to NPR, “ In the first round of PPP funding, loans of more than $2 million accounted for around 1.5% of total loans, but around one-quarter of the total pool of money. This time, those loans are 0.35% of all loans, but they account for just over 16% of the total pool of second-round money.” [NPR, 5/4/20]
Publicly Traded Luxury Hotel Management Company Ashford Inc. Refused To Return $60 Million In PPP Funds. According to CBS News, “Ashford Inc., the publicly traded hotel management chain owned by Monty Bennett that has received tens of millions of coronavirus relief aid, says it plans to ignore critics and keep the money it's getting from a federal loan program meant to assist small business impacted by the coronavirus. In a statement posted on its website Saturday, Dallas-based Ashford said it and its affiliated companies, which manage hotel sites for luxury hospitality brands including Ritz Carlton, plan to keep all of the funds the companies receive — nearly $60 million so far — under the Paycheck Protection Program.” [CBS News, 4/25/20]
Ashford Had Applied For $126 Million In PPP Loans. According to CBS News, “Ashford also revealed in the statement that the company and its more than 100 hotel affiliated hotel properties have applied for far more money through the Paycheck Protection Program than was previously known —up to $126 million in forgivable low-interest loans. That would make Ashford the country's largest known beneficiary of the small business rescue fund if it were to receive all the loan money for which it has applied.” [CBS News, 4/25/20]
Only 12 Percent Of Minority Owned Business Who Applied For PPP Loan Received What They Asked For. According to Forbes, “Just 12% of black and Latino business owners who applied for PPP (Paycheck Protection Program) loans reported receiving what they asked for, according to a survey by Global Strategy Group, and nearly half of these individuals say they anticipate being forced to close permanently in the near future.” [Forbes, 5/18/20]
SBA Inspector General Found That Agency Had Failed To Prioritize In ‘Underserved’ Markets, Including Business Owners Of Color. According to NPR, “But a new report from the Small Business Administration's inspector general found that businesses owned by people of color may not have received loans as intended under the Paycheck Protection Program. There was no evidence, the report said, that the SBA told lenders to prioritize business owners in ‘underserved’ markets, including business owners of color — something the CARES Act had specifically instructed the SBA to do.” [NPR, 5/12/20]
Minority Businesses Had Difficulty Accessing PPP loans due to lack of bank branches in majority-black or Latino neighborhoods, majority-black or Latino neighborhoods. According to CBS News, “The U.S. government's PPP loan program, meant to help business owners across the country, has been fraught with challenges and complaints that it is not working the way it is supposed to, hitting minority businesses particularly hard. A fundamental challenge is that a number of large banks do not have branches in majority-black or Latino neighborhoods, said Robert Smith, CEO and founder of Vista Equity Partners, a private equity and venture capital firm.” [CBS News, 5/23/20]
Many Minority Owned Business Were Small “Sole Proprietors” Who Did Not Provide Large Profits To Banks. According to CBS News, “Asked about why minority-owned businesses are getting the brunt of the PPP loan fallout, Smith explained that the ‘vast majority’ of them are ‘sole proprietors’ who usually have under five employees, and so apply for smaller loans that do not provide much of an economic incentive for large banks. ‘Unfortunately, it's basic economics,’ he said. ‘The larger loans, even though they get a smaller fee, it's a quantum of dollars to the banks that incentivizes them to prioritize the bigger companies, the bigger loans, as opposed to the smaller ones.’” [CBS News, 5/23/20]
SBA Rules Meant Some Businesses Owned By One Person Were Only Allowed To Apply A Week After Other Businesses. According to NPR, “Some businesses owned by one person — such as some sole proprietorships, like Ugboajah's Neka Creative — were only allowed to apply for funds one week after other businesses. That put them in the back of the line to get the money, which ran out quickly during the first round.” [NPR, 5/12/20]
Minority Owned Businesses Were More Likely To Be Run Out Of Personal Checking Accounts, Making The Ineligible For PPP Loans. According to NPR, “‘Black- and Hispanic-owned businesses, because of their lack of access to capital from banks and financial institutions and friends and family, are far more likely to use personal funds to finance their businesses,’ he said. ‘And generally, that's run out of personal checking accounts.’ That could be a problem for some businesses in the program, because some banks would loan only to people with business accounts. So owners without those — who were, for example, running their businesses out of their personal accounts — were shut out.” [NPR, 5/12/20]
Community Development Financial Institutions Were Barred From Participating IN PPP Despite asking Treasury Department. According to the Washington Post, “‘The fissures of inequality that were there prior to the pandemic are going to be worse if we don’t immediately, you know, bring in mediating institutions … who can make the loans where we know it will make a difference,’ said Lisa Mensah, president of a national association of community financial institutions focused on people typically underserved by mainstream banks, including low-income minority business owners. Hundreds of those organizations, known as Community Development Financial Institutions, are unable to participate in the Paycheck Protection Program (PPP) due to the Treasury Department’s eligibility restrictions, according Mensah’s group. Mensah said that is despite a conversation with ‘noncommittal’ department officials.” [Washington Post, 4/24/20]
Center For Responsible Lending Report “About 90% Of Businesses Owned By People Of Color ‘Stand Close To No Chance Of Receiving A PPP Loan Through A Mainstream Bank Or Credit Union.’” According to the Texas Tribune, “April report from the Center for Responsible Lending found that about 90% of businesses owned by people of color “stand close to no chance of receiving a PPP loan through a mainstream bank or credit union” for the reasons the local Texas officials cite: a lower likelihood of having a relationship with banks, a lack of digital skills, a distrust of government. The center was started with support from the Sandler Foundation, which provided most of the original funding for ProPublica and remains its largest donor.” [Texas Tribune, 6/5/20]
Firms With Republican Connections Received Over $18 Million in PPP Funds. According to NBC News, “While the government has not yet identified the entities that received the funding under the program, an in-depth analysis of almost 200 recipients by NBC News raises questions about some of them. The analysis shows three companies with ties to the Trump administration received a total of $18.3 million under the program.” [NBC News, 4/24/20]
Hallador Energy, A Coal Company That Received $10 Million, Had Hired Former EPA Head Scott Pruitt As A Lobbyist In 2019. According to NBC News, “Hallador Energy, a coal company in Denver that snared $10 million under the program, is among the recipients with ties to the Trump administration. Last year it hired Scott Pruitt, a former administrator of the Environmental Protection Agency under Trump, to lobby on its behalf, disclosure records show.” [NBC News, 4/24/20]
Crawford United Received $3.7 Million – Former Board Member Was Trump’s Ambassador To Ireland. According to NBC News, “Crawford United, a holding company based in Cleveland, Ohio, received a $3.7 million loan. Edward F. Crawford, a board member of the company since 2012, was sworn in as U.S. ambassador to Ireland last June. He resigned his board position at that time.” [NBC News, 4/24/20]
Flotek Industries Received $4.6 Million – Trump’s National Security Trump's Acting Director Of National Intelligence, Richard Grenell, Was Formerly A Consultant To The Company. According to NBC News, “Flotek Industries, an energy services company in Houston, said it received a $4.6 million loan. Richard Grenell, Trump's acting director of national intelligence and ambassador to Germany, had worked as a consultant for Flotek, disclosure records filed in 2017 show. The documents did not say when Grenell last worked for the company.” [NBC News, 4/24/20]
MiMedx Received $10 Million, Companies Former CEO Was Trump’s Georgia Finance Chair in 2016. According to NBC News, “MiMedx Group, a maker of skin grafts that received $10 million, is trying to move forward after settling with federal investigators over its accounting and sales practices. Three weeks ago it agreed to pay $6.5 million to settle Justice Department accusations it had overcharged hospitals run by the Veterans Administration. The settlement did not include admission of the allegations. MiMedx's former chief executive, Parker H. Petit, was Donald Trump's finance chairman in Georgia in 2016. Petit is under indictment for securities fraud and awaiting trial in the southern district of New York. He has pleaded not guilty.” [NBC News, 4/24/20]
70 Private Air Charters Received $157 Million in Coronavirus Aid. According to ProPublica, “But private charters haven’t been left out. About 70 such companies received CARES Act funds as of April 27, according to the first round of disclosures to 96 recipients published this week. That represents just a fraction of the roughly 2,000 private jet companies operating in the U.S., as compiled by Private Jet Card Comparisons, an independent buyer’s guide. In total, they received about $157 million in taxpayer aid, less than a percent of the more than $23 billion disbursed so far for the passenger airline industry.” [ProPublica, 5/15/20]
Clay Lacy Aviation Received $27 Million PPP Loan. According to CNBC, “A private jet company founded by a donor to President Donald Trump received nearly $27 million in government funding under a program run by the Treasury Department, according to government filings.” [CNBC, 5/14/20]
CL Aviation In Los Angeles Used A PPP Loan To Provide Credits To Private Jet Owners. According to NBC News, “The company, Clay Lacy Aviation, will be able to keep pilots and flight attendants employed with the money it received. But the company, located near Los Angeles, also decided to provide a benefit for clients who own the jets it manages, a rich set who weren't the target of federal coronavirus relief funds. The owners who opted in will get account credits through a formula based on the amount of the loan and the cost each owner incurs to employ crew members, according to a letter written by a top company executive that one of the clients provided to NBC News. ‘CLA was approved for a loan and recently received funding,’ Bradford W. Wright, Clay Lacy Aviation's chief financial officer, wrote in the letter, dated April 29. ‘CLA is prospectively offering aircraft owners a credit for a portion of full-time payroll and employee benefit costs paid through CLA to their respective flight, cabin and maintenance crew members during the covered period.’ The crew members keep their jobs, which is a condition of the taxpayer-backed loan, and jet owners keep more of their money, which isn't.” [NBC News, 5/28/20]
Firm’s Founder Was A Trump Donor. According to NBC News, “Clay Lacy Aviation was named for its founder, who developed air-to-air cinematography techniques for blockbuster films such as "Top Gun" and is a donor to Trump.” [NBC News, 5/28/20]
Private Jet Owners Were Hidden Behind Corporate Entities, Unknown If Any Were Foreign Nationals. According to NBC News, “Jon Croasmun, senior vice president and corporate trust manager for the Bank of Utah, which is the registered owner of more than a half-dozen aircraft managed by Clay Lacy Aviation, said the company holds titles to planes in trust but isn't part of financial arrangements with management companies. The bank generally represents both U.S. citizens and foreign nationals who own airplanes. He declined to say whether any of the clients it shares with Clay Lacy Aviation aren't Americans. ‘The only time we divulge ultimate ownership is if the FAA asks’ he said, adding that the agency hasn't sought that information. That means it is unlikely that the Treasury Department or the SBA know whether bailout money is being turned into credits for foreign nationals.” [NBC News, 5/28/20]
Jet Linx Aviation Received $20 Million In Coronavirus Aid. According to ProPublica, “An Omaha, Nebraska-based private jet company whose principal owner donated generously to Donald Trump and Republicans ahead of the 2016 election received $20 million in taxpayer aid from the federal bailout package passed in March. Jet Linx Aviation, which caters to well-to-do CEOs and executives, was the second private plane company founded or owned by Trump donors to receive federal funds designated for the airline industry under the Coronavirus Aid, Relief and Economic Security Act.” [ProPublica, 5/15/20]
Jet Linx Vice Chairman And His Wife Gave Almost $70,000 To Trump. According to ProPublica, “Jet Linx Management Company Vice Chairman John Denny Carreker and his wife, Connie, gave $68,100 to Trump’s campaign, the Republican National Committee and the Trump Victory Committee between October 2015 and November 2016, Federal Election Commission filings show. Connie Carreker gave an additional $1,000 to the Trump campaign in November 2018, according to the FEC.” [ProPublica, 5/15/20]
CL And Jet Linx Received About 10 Times The Average Of What Other Private Air Companies Received. According to ProPublica, “The average grant amount for the 70 private jet companies to receive aid was $2.2 million, about a tenth of what Jet Linx and Clay Lacy each received.” [ProPublica, 5/15/20]