Small businesses struggling to stay afloat were supposed to reap the most benefits from the federal Paycheck Protection Program (PPP). Instead, millions went to public companies worth millions, businesses with thousands of employees and even to some firms that were about to fold before the coronavirus crisis hit.
Lenders awarded a combined $300 million in Small Business Association (SBA) loans to a minimum of 75 firms publicly traded on the stock market, according to an Associated Press (AP) analysis of thousands of regulatory filings. Some of the businesses granted forgivable PPP loans had valuations that topped $100 million. Another 25 percent of the companies receiving aid had already been struggling before the virus gripped the nation.
Part of the $2.2 trillion CARES Act, PPP loans totaling $349 billion were intended to help otherwise thriving small-and-medium-sized (SMBs) with less than 500 employees survive the downturn caused by the unforeseen circumstances surrounding the worldwide pandemic.
Eight public businesses or their affiliated branches were granted $10 million loans, the most any single company could receive. Included among those firms was a California software company probed by the Securities and Exchange Commission (SEC) in connection with overstated revenue at the end of 2019, the AP investigation showed, according to the Tuesday (April 21) report. The company settled with the SEC.
The SBA said in a report last week that 4,400 companies scheduled to receive PPP loans topped $5 million. The average loan was $206,000, according to the SBA’s statistics.
The list of companies analyzed by the AP that are getting PPP loans represents just a minor percentage of the 1.6 million loans extended prior to the program running out of money just a few days after it launched on April 3.
A complete list of PPP loan recipients has not been made available by the White House, Treasury, SBA or banks.
Treasury Secretary Steven Mnuchin told the AP last week that just 26 percent of PPP loans exceeded $150,000, which was an example of “the accessibility of this program to even the smallest of small businesses.”
Mnuchin, along with Democratic leaders, said they are close to finalizing a deal that would allocate additional funding for more PPP loans for small businesses struggling to stay afloat amid the coronavirus pandemic.