The government created the Paycheck Protection Program to provide forgivable loans for cash-strapped small businesses. However, larger, well-connected businesses didn’t pass up the chance to raid the government’s coffers.
President Trump’s administration published the names of PPP recipients for the first time on Monday. Also, many borrowers didn’t seem to fit with the program’s goals. Many of the companies that received significant loans are well-funded corporations with strong ties in Washington. The list is raising some serious concerns about the government’s free-wheeling approach to pandemic relief spending.
The list only included companies that received loans exceeding $150,000. Therefore, the release didn’t include most smaller businesses. However, the companies on the list took the lion’s share of the disbursed funds. This happens despite representing only 15% of the program’s total of 4 million borrowers. According to the Wall Street Journal, $3 out of every $4 lent went to large businesses listed on Monday’s release.
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Businesses That Received Loans
Wow!!! Hammill told The Post that Pelosi owns 8.1 percent of EDI Associates, which got a loan between $350,000 and $1 million. The company invests in the El Dorado Hotel in Sonoma, Calif. Pelosi’s stake is worth between a quarter and half-million dollars. https://t.co/Nm7ryEo9JP
— Elizabeth Core (@EllaCoreleone) July 7, 2020
The data didn’t include specific loan amounts. Although, many of the businesses may have received loans as large as $10 million. Under current PPP guidelines, the government will forgive the loans as long as the businesses spend at least 60% on payroll and other requirements. Taxpayers are left to pick up the tab.
The list of borrowers is throwing heating up the debate over the government’s handling of billions of dollars worth of coronavirus relief. This is particularly true with regard to PPP. The program’s critics say most of the money went to well-off large businesses who shouldn’t have received forgivable loans at the expense of U.S. taxpayers. However, many say the deluge of cash was necessary to support the economy during a time of extreme crisis and the rapid availability of federally-backed loans may have averted a full-blown financial meltdown.
To complicate matters further, several businesses with strong ties to Congressional lawmakers also received loans, including House Speaker Nancy Pelosi (D-CA). Her husband, Paul Pelosi, is a prominent stakeholder in a Northern California firm that received a loan between $350,000 and $1 million. The firm, EDI Associates, primarily invests in the El Dorado Hotel based in Sonoma, California. According to official disclosures cited in the New York Post, Mr. Pelosi’s 8.1% stake in the company is worth between $250,000 and $500,000. A spokesperson for Ms. Pelosi said her husband is only a passive investor who wasn’t aware of the loan.
The economic analysis accompanied the list of borrowers. The analysis concluded that the program equally distributed the funds throughout the country. Low-to-moderate-income areas, which include 28% of the total U.S. population, received 27% of PPP loans. Small Business Administration Chief Jovita Carranza defended the program’s track record in a publicly released statement. “The PPP is an indisputable success for small businesses, especially to the communities in which these employers serve as the main job creators,” Carranza said. “In three months, this Administration was able to act quickly to get funding into the hands of those who faced enormous obstacles as a result of the pandemic.”
Unsurprisingly, the mainstream media narrative blames the Trump Administration for the disparaging loan data. The Wall Street Journal devoted two paragraphs to covering a loan to the Trump Village housing complex in Coney Island, Brooklyn. It received a loan ranging from $350,000 to $1 million. However, the Journal fails to mention that the Trump family sold its stake in the property in 2003.
With so much cash moving around, it’s no surprise that well-funded corporations found ways to exploit the PPP guidelines. The politicians are already playing the blame game, but Democrats can’t pin this one on Trump. Democrats voted to approve the PPP guidelines along with the rest of Congress, and they even supported efforts to loosen the program’s spending restrictions last month. The left is quick to point the finger at the president anytime something goes wrong, but Democratic lawmakers are equally responsible for passing legislation with loopholes large enough for big businesses to squeeze through.