Loan data released for some firms
— The federal government on Monday identified about 650,000 small businesses and nonprofits that received taxpayer money from a program that aimed to soften job losses from the coronavirus but also benefited some politically connected firms.
The Treasury Department’s Payroll Protection Program approved applicants from a broad swath of industries. Some that were less directly affected by the pandemic, such as manufacturing and construction, received a greater proportion
of the loans than the hard-hit restaurant and hotel industries. Many law firms and private equity companies also obtained loans.
Businesses owned by politicians also borrowed from the program, including a minor league baseball team owned by the family of the governor of Ohio. A large franchisee of Wendy’s, Taco Bell and Pizza Hut restaurants, whose chief executive is a major donor to President Donald Trump, received loans totaling $15 million to $30 million.
Other recipients included Kanye West’s clothing and sneaker brand Yeezy; Ice Cube’s professional basketball league; Planned Parenthood clinics in more than two dozen states; and Americans for Tax Reform, the anti-tax group led by Grover Norquist.
As of June 30, the program had handed out $521 billion. The Treasury Department identified just a fraction of the total borrowers Monday, naming only companies that got more than $150,000. Those firms made up less than 15% of the nearly 5 million small companies and organizations that received loans.
Details released Monday by the Small Business Administration said that program loans helped businesses in Arkansas retain more than 375,000 jobs.
Borrowers in the state that received loans of more than $150,000 retained 209,212 jobs, according to statistics provided by agency’s Arkansas office. Companies that borrowed up to $150,000 retained 166,529 jobs, officials said.
Statewide, more than 42,000 small businesses borrowed a total of $3.3 billion to stay afloat and keep employees on the payroll during the pandemic. The average loan in Arkansas was about $80,000, according to Small Business Administration statistics.
The Arkansas information released Monday also notes that about 4,200 of the participants borrowed more than $150,000.
Of those 4,200 loans, nearly 450 Arkansas companies borrowed more than $1 million. Just 19 firms were lent $5 million to $10 million, according to the statistics. The loans had a borrowing cap of $10 million.
Across the country, agriculture, forestry, fishing and hunting companies got at least $6.4 billion in small-business loans, the data showed. More than 100,000 such entities received funds, including soybean and corn farmers, beef and dairy operations, hunters and trappers, vineyards and fruit and vegetable growers.
Senate Democratic leader Charles Schumer of New York described the data release as a “good start” but lamented that it took so long and “so much pressure from Democrats” to make the information public. He said more transparency was needed “to ensure that these taxpayer dollars went where Congress intended — to the truly small and underbanked small businesses.”
Economists generally credit the program with helping prevent the job market meltdown from being much worse. Employers added 7.5 million jobs in May and June, a solid increase that was probably driven in part by the Paycheck Protection Program. The economy still has nearly 15 million fewer jobs than it had before the pandemic.
Research by the Federal Reserve found that companies with fewer than 50 workers before the pandemic saw their hiring rise 12% in May, while jobs grew just 5% in larger firms, suggesting the program helped fuel rehiring.
But the program was only intended to carry the economy through a short interruption from the pandemic, which is now threatening to have a longer-lasting impact. The Treasury Department initially required the loans to be spent within eight weeks of being received, though that was later extended to 24 weeks.
Many small businesses have already run through their program money and still face a sharp drop in demand, as consumers remain wary of returning to previous habits of shopping, visiting gyms or eating out. Texas, Florida, California, New York and others states have reversed their reopenings, closing down bars and delaying the onset of indoor dining.
“The biggest issue is that PPP is short-term help,” said Adam Ozimek, chief economist at Upwork, a freelancing platform. “And now we’re dealing with a mid- to longterm problem.”
A survey by the National Federation of Independent Business found that as of mid-June, 14% of small businesses that borrowed from the program expected they would have to lay off some workers when their loans ran out.
The program provided loans for small businesses to help them recover from the government-ordered shutdowns and the revenue losses caused by the virus. The average loan amount for the entire program was $107,000, the Treasury Department said in its broad summary of the program.
The loans can be forgiven if businesses mostly use the money to continue paying workers. The program initially was set to expire at the end of June but was extended last week to Aug. 8, with $132 billion still available.
The recipients employed 51 million people before the pandemic began, Treasury Secretary Steven Mnuchin said. That amounts to about 85% of all workers at companies with fewer than 500 employees. The government will not know how many of these jobs were actually saved until companies apply to have the loans forgiven, a process that is just beginning.
A senior administration official said Monday that some small companies “will need additional support” in the coming months.
The public may never know the identities of more than 80% of the nearly 5 million beneficiaries to date because the administration has refused to release details on loans under $150,000. That secrecy spurred a lawsuit by news organizations including The Associated Press.
The Treasury Department has released only dollar ranges for the loan amounts, rather than exact figures.
High-profile evangelical megachurches, including several with pastors who have backed Trump, also received loans after religious entities were permitted to seek aid even if they performed only faith-based functions.
Among the churches that received loans was First Baptist Dallas, the Texas megachurch where senior pastor Robert Jeffress hosted Vice President Mike Pence for a recent service. Jeffress’ church reported retaining nearly 300 jobs with its loan of between $2 million and $5 million.
Some major supporters of Trump also benefited. Muy Brands Inc., a San Antonio-based franchisee with more than 750 Wendy’s, Taco Bell and Pizza Hut restaurants, received between $15 million and $30 million between three entities. Muy Brands CEO James Bodenstedt is a major donor to the president. He has given $300,000 to the Trump Victory PAC since the start of this year, according to federal campaign finance records.
Some less obvious groups also took loans, including Washington lobbying firms, trade groups, political organizations, consulting firms and special interest groups.
An arm of Americans for Tax Reform, the influential conservative group that has been a vocal critic of government spending, received between $150,000 and $350,000, according to the government’s data. The group recently released a letter urging the government to lift a restriction on the loan program that was stopping money from going to some companies.
The restaurant-and-hotel industry lost nearly half of its pre-pandemic jobs in March and April. It ranked fifth on a list of recipients. Health care, professional and business services, construction and manufacturing received greater shares of the loans.
And according to an analysis by Beth Ann Bovino, U.S. chief economist at Standard & Poor’s, some states with the smallest increases in unemployment from the pandemic got more loans than harder-hit states.
“It didn’t reach the industries that needed it, and it looked like it didn’t reach the states that were hardest hit,” Bovino said.
Media companies, including Newsday and American Media, former owner of the National Enquirer, got loans of up to $5 million.
The data gave few details about loans to businesses owned by members of minority groups. Companies were not required to supply demographic data on their applications, and many entries about race and gender were listed as “unanswered.”
However, many such businesses are run by the owner with few, if any, employees, so their loan amounts likely were under $150,000 and therefore not part of the data release. Senior administration officials who briefed reporters before the release said they hoped to get more information when owners submit applications for loan forgiveness over the next few months.
Information for this article was contributed by Christopher Rugaber, Joyce Rosenberg, Farnoush Amiri, Dee-Ann Durbin and Holly Ramer of The Associated Press; by Jeanna Smialek, Jim Tankersley and Ben Protess of The New York Times; by Michael Hirtzer of Bloomberg News; and by Andrew Moreau of the Arkansas Democrat-Gazette.