Who Got Big Bucks Through Small Business Rescue Program?

In The News, Covid19Who Got Big Bucks Through Small Business Rescue Program?

Budget & Tax, In The News,  | Quick Take
Jul 8, 2020  | 10 min read | Print Article

This article by Yuval Rosenberg first appeared in The Fiscal Times on July 7, 2020

The Trump administration on Monday released data on loans made through the Paycheck Protection Program meant to help small businesses get through the coronavirus pandemic, including the names of 660,000 companies that received loans of $150,000 or more. The loan recipients include restaurant chains, businesses linked to members of Congress and the Trump administration, high-priced law firms, special interest groups, Planned Parenthood locations and Kanye West’s clothing and sneaker company, Yeezy.

The disclosure could bring some renewed criticism of the PPP, which has faced questions about whether it is reaching the businesses that need help the most. The program generated some outrage early on when large, publicly traded companies said they had taken out loans. More than $30 billion in loans were reportedly returned after the administration said that companies with access to other sources of capital shouldn’t be borrowing through the program.

“My 1,000-foot takeaway is that the government was handing out free money and the line went around the corner,” Aaron Klein, a fellow in economic studies at the Brookings Institution, told The New York Times. “This is not your mom-and-pop shop on Main Street.”

The big picture: The program issued more than $521 billion across nearly 4.9 million forgivable loans through June 30. The health-care and social assistance industry received more than $67 billion, or 12.9% of the loan money. Professional and technical services got 12.7%, while 12.4% went to construction and 10.3% went to manufacturing

The program still has $131.9 billion in funding left unused, though Congress just passed legislation to extend the application deadline through August 8 and is considering ways to repurpose funds left over.

The data released Monday doesn’t include names or addresses for businesses receiving loans of less than $150,000, which collectively represent 86.5% of loans and about a quarter of the total loan dollars approved. The data also only provides loan amounts in broad ranges, which groups advocating for government transparency criticized as inadequate.

Treasury Secretary Steven Mnuchin said that the PPP has supported more than 51 million jobs and more than 80% of all small business employees, with an average loan size of about $107,000. Still, nearly 49,000 loan recipients reported that they would save zero jobs with the borrowed money and nearly 41,000 others did not say how many jobs they would keep with the money, according to The Washington Post. Ten companies apparently received between $5 million and $10 million but reported retaining only one job with the money, the Post says.

Who got big loans: More than 4,800 businesses received loans between $5 million and $10 million. “Restaurants, medical offices and car dealerships were the top recipients of large loans from the program,” the Times reports. “More than 40,000 full- or limited-service restaurants received loans worth as much as $32 billion, according to the ranges provided by the government.” Among the large chains with Wall Street backing that received loans between $5 million and $10 million were PF Changs, Legal Sea Foods and Silver Diner, according to the Post.

The Times also notes that doctors’ offices received as much as $19 billion, while law offices got $13 billion, with more than 100 law firms getting loans ranging from $1 million to $10 million. The firm of President Trump’s longtime personal lawyer, Marc Kasowitz, received between $5 million and $10 million. The firm said the money enabled it to keep on its hundreds of employees at full salary and benefits.

Businesses linked to lawmakers got millions: “At least nine lawmakers and three congressional caucuses have ties to organizations that took millions of dollars in aid,” Politico reports. “In total, companies linked to lawmakers and congressional caucuses have received at least $11 million in aid from the federal program that Congress created to help small businesses.”

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It is not illegal for lawmakers to receive the loans, and their offices generally emphasized that the money was taken to help keep workers employed.

Among the lawmakers who own or have other ties to businesses that received loans are Republicans Reps. Rick Allen (GA), Vicky Harzler (MO), Kevin Hern (OK), Mike Kelly (PA), Markwayne Mullin (OK) and Roger Williams (TX) as well as Democratic Reps. Matt Cartwright (PA), Susie Lee (NV) and Debbie Mucarsel-Powell (FL). A company tied to the husband of House Speaker Nancy Pelosi (D-CA) got a loan of between $350,000 and $1 million.

The Congressional Black Caucus Foundation and the Congressional Hispanic Caucus Institute, the nonprofit arms of the member caucuses, also received loans of between $350,000 and $1 million each.

Trump-connected loans: The Trump Organization did not apply for PPP loans, but many tenants at buildings owned or managed by Trump reportedly received funds. An Associated Press analysis found that as much as $273 million in PPP aid went to more than 100 companies that are owned or operated by major Trump donors, though the report notes that there’s no evidence the companies received favorable treatment as a result of their Trump connections. Other loan recipients were linked to Jared Kushner, Trump’s son-in-law and senior adviser. Businesses tied to Trump’s family and associates stand to get as much as $21 million in loans, according to ProPublica.

The disclosure could again raise questions about the extent to which the president’s businesses are benefitting from his government role, but plenty of politically connected applicants got PPP funds.

“A firm that raises money for Mr. Trump’s re-election campaign and the Republican National Committee received a loan of more than $1 million, according to the data set, while a company that produces Mr. Trump’s political advertisements received between $350,000 and $1 million,” the Times reports. “So did a consulting firm started by President Barack Obama’s former campaign manager Jim Messina and one that Hillary Clinton’s 2008 campaign paid for communications consulting.”

Cultural institutions: Some well-known cultural institutions — including some with large endowments — received millions in PPP loans, Bloomberg News reports: “The institutions — such as Carnegie Hall and the Whitney Museum of American Art in New York and the San Francisco Symphony — were among the largest recipients of aid to nonprofits under the program, with each of them receiving injections in the range of $5 million to $10 million.”

Grover Norquist’s anti-spending group took a loan: A foundation affiliated with Grover Norquist’s Americans for Tax Reform, a conservative group known for its anti-tax advocacy and its efforts to rein in government spending, received a PPP loan of between $150,000 and $350,000. In a statement, the organizations said Americans for Tax Reform had never opposed PPP and that the foundation that received the loan “was badly hurt by the government shutdown,” used the money to avoid layoffs and “does not engage in lobbying.”

But the Daily Beast notes that Norquist had signed on to a recent letter asking Trump and McConnell to stop spending on coronavirus relief. “The inside-the-beltway crowd falsely calls these trillions of dollars a ‘stimulus’ to the economy,” the letter read. “But government can only give money to some people, as Nobel-prize winning economist Milton Friedman taught all of us many years ago, by taking money from others.”

Two other groups focused on cutting government spending, Taxpayers for Common Sense and Citizens Against Government Waste, also received PPP loans, as did Citizens United, the group that fought to enable more corporate spending on elections. On the Left, Media Matters for America reportedly received a loan of between $1 million and $2 million while the Center for Economic and Policy Research and The Institute on Taxation and Economic Policy each received between $350,000 and $1 million, according to Roll Call.

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