Every COVID-19 stimulus plan offered since March—including the $3 trillion HEROES Act the House passed 200 days ago, the compromise $2.2 trillion bill they passed 62 days ago and the messaging “skinny” bills Mitch McConnell keeps offering—include a new round of funding for the Paycheck Protection Program, the problematic small business loan program. New disclosures of where the bulk of that money has gone—including to properties owned by the Trump Organization as well as the Kushner Companies—argue that it’s a bad way to spend any more taxpayer money that is supposed to be helping people, and it needs to be abandoned.
A Freedom of Information request and months of litigation finally resulted in the Small Business Administration releasing the full dataset of loans issued, loans that were supposed to have gone to small businesses on the condition that they keep their employees on payroll. Businesses using Trump and Kushner property addresses received more than two dozen loans worth a total of $3.65 million—15 of them reported that they kept just one employee, no employee, or didn’t bother to report at all. The Triomphe Restaurant Corp., at the Trump International Hotel & Tower in New York City, got nearly $2.2 million alone. It did not spend the money on payroll, keeping no jobs and later closing.
Beyond the Trump/Kushner cashing in, the real problem with the administration of the program was uncovered. More than 100 loans were given to companies that didn’t have a business name listed, or were listed as “no name available,” or had numbers like dates or phone numbers listed in the business name field. The sloppiness extended to loans given out—more than 300 companies got loans through subsidiaries, bypassing the limit of $10 million per entity by having subsidiaries secure them. About 600 large companies, including dozens of national chains, got the maximum amount of $10 million.
In fact, just 5% of businesses—many of them these very large corporations—got more than half of the PPP money. Just 28% of the funds distributed were in amounts less than $150,000, suggesting that not a lot of truly small businesses got help. The Washington Post’s analysis shows that the reporting has been, at best, erroneous and at worst fraudulent. Companies have reported retaining more workers than they actually employed before the pandemic. In some cases, the Post reports, “the agency’s jobs claim for entire industries surpassed the total number of workers in those sectors.” Imagine that. An agency in the Trump administration falsifying information.
Already, investigators at the Justice Department, FBI, IRS and other agencies have uncovered substantial fraud. As of September, 57 people had been charged with stealing $175 million in funds from the program. The program also had a “blanket approval” for member of Congress, their families, and government officials to get loans without having to go through a conflict of interest review process that all other borrowers were supposed to have. Which means some of these people and their families—including White House press secretary Kayleigh McEnany’s parents—received the loans.
Previous analyses showed that Black-owned business were being shut out of the program, largely because they have always been shut out of loan programs and don’t have the preexisting relationships with banks to grease the skids for obtaining the PPS loans.
Government accountability groups are blasting the administration and the program. “Many months and broken promises later, the court-ordered release of this crucial data while the Trump administration is one foot out the door is a shameful dereliction of duty and flagrant mismanagement of a program that millions of workers and small businesses needed to get through this pandemic,” Kyle Herrig, president of Accountable.US, an accountability watchdog, said in a statement provided to NBC News. “Only now—after its hand has been forced, hundreds of thousands of small businesses have gone under, and millions of taxpayer dollars were wasted—has this administration pulled back the curtains to reveal the malpractice going on behind the scenes,” Herrig added. “Americans deserved an open, transparent small business aid program when this pandemic started, and any new small business relief program must take a lesson from the abject failures of this one.”
Any money that has been earmarked for the PPP in any of the proposals sitting out there waiting to become law in the next stimulus need to be directed instead to direct payments to people. Better yet, as recurring payments for the next six months to everyone. Or as grants to the real small businesses that have been hardest hit, though at this point in the crisis, the direct payments are probably a better response to the depth of the crisis.