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Paycheck Protection Program Loans Went to More Big Businesses Than We Thought

Rebecca Joseph

December 3, 2020

News article: “More than half of emergency small- business funds went to larger businesses, new data shows” from The Washington Post


The Paycheck Protection Program (PPP) is a federal loan program meant to help small businesses continue to pay their employees for eight weeks during the COVID-19 pandemic. Loans were calculated using businesses’ monthly payroll totals. The maximum loan amount was $10 million. 

The Washington Post submitted a request under the Freedom of Information Act (FOIA) to have access to PPP records from the Small Business Administration (SBA). SBA did not complete the request on time, so The Washington Post and 10 other news organizations filed and won a federal lawsuit to obtain the information.  This information revealed that 600 companies, most of which were large, received loans for $10 million. Additionally, over half of the total $522 billion for loans went to big businesses, and 28% of loans were less than $150,000. This contradicts previous claims from the SBA and Treasury Department that 87% of loans were less than $150,000.

There are a few reasons why this happened. To start, PPP’s structure was inherently flawed. Loan distribution was done by private banks, not the Treasury Department or SBA, which only played regulatory roles. These banks were motivated by profit, so they prioritized loans to large companies. Bigger companies paid larger fees, so the banks were incentivized to focus on them.  Additionally, the FBI, Justice Department, IRS, and other government agencies are working together to uncover fraudulent borrowers. As of September, the government charged 57 people for trying to steal $175 million in loans.

I am frustrated that this happened because this program was intended to help small businesses, but big businesses took advantage of it. There are so many small businesses around the country that have closed because of the pandemic, so it is disappointing to learn that big businesses and restaurant chains that bring in millions of dollars every year are taking money that could be going to small businesses.

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