Officials from the Treasury Department and the Small Business Administration have long insisted that the government’s Paycheck Protection Program (PPP), set up as a coronavirus emergency fund for small businesses, primarily benefited small businesses because 87 percent of the loans were for less than $150,000.
However, new data shows that more than half of the $522 billion went to bigger businesses and just 28 percent of the money was distributed in amounts less than $150,000, Washington Post reported.
Just 5 percent of PPP recipients got more than half of the money from the Treasury Department fund for small businesses, according to data on more than 5 million loans that was released Tuesday by the government.
Real estate properties owned by President Donald Trump and his son-in-law Jared Kushner were among the recipients. They received $3.65 million of loan money through the PPP, according to an analysis by NBC News.
The information was released after a federal lawsuit filed by 11 news organizations including the Washington Post challenged the SBA’s refusal to release records on PPP borrowers and loan amounts.
“The data shows that this program primarily benefited the well-banked and well-lawyered at the expense of the small businesses it was supposed to benefit,” said Liz Hempowicz, director of public policy for the nonprofit Project on Government Oversight.
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Banks earned a percentage of the loans in origination fees. JPMorgan, the largest bank in the U.S., was one of four lenders that has been sued, accused of prioritizing the biggest loans to earn higher fees, Bloomberg reported.
Almost all of JPMorgan‘s large commercial banking customers who applied for loans got them in round one of the SBA relief program, according to data disclosed by the bank. Larger companies had lawyers and accountants filling out their paperwork, which helped them get applications completed and filed early.
Money ran out in eight days for round one of the PPP loans.
In September, JP Morgan announced is was investigating evidence that some of its employees and customers may have engaged in fraud when distributing and obtaining billions of dollars in loans from government coronavirus relief programs.
The new government data provides the first full account of how federal money was spent through the program. It was meant for small companies — generally those with 500 or fewer workers. The data shows what many have suspected all along: The money was shared unevenly, with the largest amounts going to a few companies in need, New York Times reported.
Larger companies like the New York-based Shake Shack — market capitalization: $3.4 billion — managed to secure loans. The publicly-traded burger chain decided to return the entire $10 million it received from the U.S. government loan.
The PPP program was supposed to give forgivable loans to desperate business owners facing shutdowns. About 600 businesses — including powerful law firms like Boies Schiller Flexner, restaurants like the steakhouse chain started by Ted Turner, and the operator of New York’s biggest horse tracks — received the maximum loan amount of $10 million, according to the data, NYT reported.
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The PPP program didn’t have many built-in ways to stop fraud, according to Page Pate, an Atlanta attorney who has represented whistleblowers in PPP cases as well as people accused of PPP loan fraud.
“The government felt that it was more important to put some gas in the tank and put money out in the community quickly,” Pate said. “They knew that there was going to be a certain amount of fraud” because the program was launched so fast.
Congress has been in a stalemate since the summer on passing a new stimulus package.
As covid-19 cases skyrocket, a bipartisan group of senators unveiled plans on Tuesday for another $908 billion in stimulus, including close to $300 billion in new funding for the Paycheck Protection Program and other Small Business Administration programs.
“I think there’s a deep recognition … that we’ve got to get something done. People are really hurting. Small businesses are going out, scores of them, every single day,” Rep. Josh Gottheimer (D-N.J) said on “Squawk Box.”