President Trump and Congress are set to spend hundreds of billions of dollars more on the SBA’s Paycheck Protection Program (PPP), but the bill that just passed the Senate obviously learned nothing from the disastrous first rollout that saw legitimate, near-bankrupt small businesses pushed aside to make room for massive restaurant chains and hotels. This time around, all the same loopholes for PPP funds still exist that let giant publicly-traded companies pass themselves off as any other mom-and-pop shop. There is nothing in this bill to prevent it all from happening again and nothing to bring more badly needed transparency into this process.
And once again, there is nothing in here keeping President Trump’s family from taking advantage of the program and putting tax dollars into their own pockets. How will doing the same thing result in a different outcome for thousands of small businesses who’ve been run through a bureaucratic maze only to be told there’s nothing left for them in the end? The House needs to inject a healthy dose of transparency, accountability and fairness into this effort if it hopes to ever pass muster with the American people.
First Round of PPP Funds Went to Big Corporations
Last week, Accountable.US Action launched TrumpBailouts.org to keep the public informed of the administration’s efforts to bail out billion-dollar corporations as the needs of newly unemployed American workers and struggling families continue to compound. They found that at least 17 companies with more than 500 employees had received $143 million in taxpayer funds.
Yesterday, the Wall Street Journal reported that even though SBA funding for more than $1 million accounted for four percent of the applications, it made up nearly 45 percent of the approved spending.
Loans for more than $1 million accounted for about 4% of applications but nearly 45% of approved dollars under the program, according to SBA data released Friday. That suggests larger companies received a disproportionate share of aid.
According to the Associated Press, at least 94 publicly-traded firms, some worth more than $100 million, received $365 million in taxpayer money:
But at least 94 companies that disclosed receiving aid were publicly traded, the AP found, and some had market values well over $100 million. And about 25% of the companies had warned investors months ago — while the economy was humming along — that their ability to remain viable was in question. By combing through thousands of regulatory filings submitted through Monday, the AP identified the 94 companies, or their subsidiaries, as recipients of a combined $365 million in low-interest, taxpayer-backed loans.
Multi-million dollar companies like Ruth’s Chris Steak House, which received $20 million in funding, and Potbelly, which received $10 million in funding while it simultaneously promised to provide one of its executives up $300,000 in bonuses this year, have taken the money and run. Shake Shack, with 189 outlets including in places like Saudi Arabia, China, and Mexico — received $10 million in taxpayer dollars but said it would return the money after public backlash. Even hedge fund managers have claimed taxpayer funds masquerading as small businesses.
First Round of PPP Funds Went to the Well-Connected
For many firms, the need for small business relief did not depend on need, but instead “often came down to how and where it banked.” Even Forbes wrote that “a lot of the money went to those with the best relationships — not the neediest or most deserving.” In fact, small businesses have brought a lawsuit against Bank of America, JPMorgan Chase, US Bank, and Wells Fargo for actions that each bank “concealed from the public that it was reshuffling the PPP applications it received and prioritizing the applications that would make the bank the most money.”
While information on recipients of the PPP funding continues to trickle out, it appears that some companies with close ties to the Trump administration were able to secure millions in funding, including $5.5 million awarded Continental Materials, to a company owned by the family of U.S. Ambassador to Belgium Ronald Gidwitz, who was previously President Trump’s campaign finance chair in Illinois. White House National Economic Council Director Larry Kudlow acknowledged that his wife applied for a PPP loan and he has not disclosed whether that loan was approved, or for how much.
Need for Oversight
For this reason, Accountable.US has been urging Congress to ensure rigorous oversight and transparency in any new taxpayer funds to businesses. No money should be approved by Congress without fixing the CARES Act’s transparency failures and any additional stimulus should guarantee equally strong disclosures for future funds. In a letter to Congress we sent last week, we laid out the minimum disclosure standards that should be included:
- The trade and registered names of corporations, as well as those of their parent companies, that receive grants, loans, or any other funding
- The amount of the funds received
- The terms of repayment, if applicable, including the interest rate charged and length of the loan
Accountable.US is a nonpartisan watchdog group that exposes corruption across all levels of government.