Far more businesses than known early on got PPP loans, then gave them back
An analysis of government spending data suggests that several big businesses were OK’d early on for Paycheck Protection Program loans, which were then returned. Several of the business owners had ties to former President Trump, and there’s no evidence he
The $349 billion Congress first allotted to help small businesses through the Paycheck Protection Program evaporated almost immediately after it was released last April.
When it emerged that a number of big businesses had hoovered up millions of dollars worth of loans — which are forgivable if used for payroll and other approved expenses — the backlash was swift.
To head off bad publicity, national chains like Shake Shack and Ruth’s Chris Steak House returned the loans for which they had been approved.
But a unique analysis of government spending data from the USASpending.gov website suggests that far more businesses than previously known were approved for loans in the earliest days of the program that were later returned or canceled.
The recipients included some of the biggest restaurant and hospitality chains in the country, including a Florida-based timeshare tycoon, a handful of companies tied to a Miami healthcare magnate, and numerous owners with close ties to former President Donald Trump, including at least one former White House staffer. There is no evidence the president influenced the process.
All told, the analysis found more than 36,000 loans approved in the short-lived first round of the program for businesses that, in the end, never took the PPP loan. The canceled loans, which totaled more than $19 billion, represent more than 5% of the total amount doled out in the first round of the PPP program, which lasted
from April 9 through April
16. While these businesses didn’t accept the money, it removed money from the pot at a moment when small businesses were scrambling to find any help they could to keep their doors open.
Among the business owners approved for loans that were later canceled was billionaire restaurateur and Houston Rockets owner Tilman Fertitta, whose restaurants and businesses were approved for more than 160 loans worth more than $160 million. Fertitta gave more than $100,000 to committees supporting Trump during his presidency and his ties with the former president extend even further back — he bought one of Trump’s struggling Atlantic City casinos from the future president back in 2011 and turned it into a branch of his Golden Nugget casino brand.
Fertitta’s company Landry’s declined the loans voluntarily, according to the company’s general counsel, Steve Scheinthal, “when it became apparent to the Company that smaller businesses just as much in need were not able to get funded.” The company said that Fertitta never discussed the loans with the now-former president.
The canceled loans also included four businesses tied to Florida multimillionaire and timeshare mogul David Siegel, that were approved for nearly $18 million. Siegel is a longtime friend of
Trump who endorsed him in 2016. His wife, Jackie, previously dated Trump and was the subject of the documentary “Queen of Versailles” about the Siegels’ uncompleted mansion based on the French palace, which they claimed would have been the largest single home in the country.
The home’s construction was halted because of the couple’s financial losses during the Great Recession, but construction has since resumed and Jackie Siegel recently said she is filming a reality show to document the home’s completion. A representative for the company did not respond to multiple requests for comment.
And in Miami it includes five businesses tied to healthcare magnate Benjamin Leon Jr., founder of Leon Medical Centers, which were approved for nearly $4.5 million in PPP loans in April 2020. Leon spent more than $3.5 million backing the failed 2016 presidential bid of Republican Sen. Marco Rubio — a key architect of the PPP program — but supported Trump in 2020, writing the
Trump Victory Committee a $700,000 check in October 2020.
Yolanda Foster, a spokeswoman for Leon Medical Centers, said the company decided it didn’t need the funds after applying for them.
“Immediately upon receipt we instructed the bank to return all funds,” Foster said.
The company approved for the most money was the Flynn Restaurant Group, which calls itself the biggest restaurant franchise owner in the country and owns more than 1,200 Applebee’s, Taco Bell, Panera and Arby’s locations across the country. In total, 42 businesses tied to the Clevelandarea company were approved for more than $178 million in PPP loans.
In a statement, the company said it “made the decision to voluntarily return the loans and seek alternate funding as part of a broader business strategy.
‘THERE’S NO PLAYBOOK’
For Wayne Labush, the idea that large, politically connected companies were able to access funds so quickly makes his blood boil.
Labush runs several Coral Springs event companies under the umbrella of the Event Services Group that have taken a huge hit during the COVID-19 pandemic as demand for event production work has largely dried up.
Labush hit a brick wall
when he first tried to secure a PPP loan when the program opened up in April. Banks process the loans, taking a fee for their services. After failed attempts with national banks and online lenders, Labush was able to secure a little more than $500,000 for two of his event businesses in late April from two local banks in Florida, Cogent Bank, based in Orange City, and U.S. Century Bank, which is based in Doral. Even with the help, Labush has had to lay off dozens of full-time employees.
He thinks the program would have saved more jobs — and businesses — if it had prioritized smaller businesses, which typically have a harder time securing loans from banks than bigger businesses, from the start.
“If you found 160 small businesses with 100 or less employees and you gave them each $1 million, you would save 10 times that many jobs,” he said.
But he doesn’t fault bigger businesses for trying to secure the PPP loans when they first became available.
“There’s no playbook on what to do when the government gives you money to help you out,” he said.
After criticism that the PPP program has favored bigger businesses, the U.S. Small Business Administration, which administers the program, last month created a two-week period of exclusivity beginning Feb. 24 when only businesses with fewer than 20 employees
could apply. The SBA said earlier this week that more than 400,000 of these smaller businesses were approved for PPP loans during the two-week period.
The SBA provided a statement from senior advisor Michael Roth in response to questions about the canceled loans and criticism that the program had previously favored larger businesses.
“While reported data illustrates we have made real strides in ensuring these funds are reaching underserved communities, we believe we can still do better,” Roth said. “The important policy changes we are announcing further ensure inclusivity and integrity by increasing access and muchneeded aid to Main Street businesses that anchor our neighborhoods and help families build wealth.”
[Disclosure: McClatchy, the parent company of the Miami Herald, recently was approved for a $10 million PPP loan.]
GOOD FAITH CERTIFICATION
The canceled-loan data give greater insight on businesses that were able to secure a piece of the PPP pie in the early going, when funds in the program were scarce, even though they ultimately didn’t receive the money. The data contain more than 340,000 unique businesses and individuals initially approved for more than $47 billion in loans.
The recipients appear on USASpending.gov as having received loans worth $0.
However, a review of the transactions associated with each of these loans shows both initial positive loan amounts and corresponding negative amounts for each of the potential borrowers. The data don’t indicate why the loans were canceled.
The SBA didn’t answer questions about what the data represented, why the loans were canceled and how many loans have been canceled to date in the program. It confirmed that the data publicly released so far by the SBA only includes active loans.
A Government Accountability Office report from last September included data from the SBA showing more than 310,000 “fully canceled” loans totaling $46.3 billion through Aug. 8, 2020, which is roughly in line with the USASpending data. The data SBA provided
to the GAO didn’t indicate why loans had been canceled, though the SBA told the GAO that loans could have been duplicate loans, voluntarily canceled by applicants or canceled for other reasons.
The GAO noted that some cancellations occurred after the SBA released guidance on April 23, 2020, that large companies with “substantial market value and access to capital markets,” likely didn’t qualify for the program, which required businesses to certify in good faith that a loan was “necessary to support the ongoing operations of the [a]pplicant.”
Nearly two-thirds of the businesses in the USASpending data don’t appear to have ever received a PPP loan, according to PPP recipient data released by the SBA this week.
Of the businesses in the data that did get a loan, roughly one in 10 were approved by Cross River Bank, a tiny New Jersey bank with only one physical location that has become one of the top lenders in the PPP program by partnering with online lenders.
The loans approved by the bank have earned more than $650 million in estimated fees, according to an analysis of the most recent PPP data, helping the bank double its net income in 2020. But the bank’s aggressive embrace of PPP lending hasn’t been without issue. It was one of the two banks that approved the most loans ultimately deemed fraudulent by federal prosecutors, a report by the Project on Government Oversight said.
PARDONS AND BENEFACTORS
The canceled loans show businesses approved for loans that were tied to some of Trump’s biggest benefactors, and at least one former White House aide.
Twelve businesses connected to Reed Cordish, a Maryland real estate developer and close friend of Jared Kushner and Ivanka Trump who served as a technology adviser in the Trump White House, were approved for PPP loans in April 2020 for more than $6.1 million that were canceled soon after. The day Trump left office in 2021, seven of the companies were approved for new PPP loans, worth a combined $2.9 million.
Cari Furman, a spokeswoman for the Cordish Companies, said that the cancellations were voluntarily, and that several entities decided to reapply when it became clear that the PPP program had sufficient funds to sustain more loans.
“These entities voluntarily canceled their firstround applications after reading that funds might be short and businesses might get shut out,” Furman said. “However, the widely reported concern of oversubscription turned out to be unfounded, and the entities that applied in this more recent round did so on the date called for in the application.”
In neighboring Virginia, the politically connected defense contractor Circinus was approved in the first week of the program for a loan of $832,642 that was later reversed.
The company is owned by Elliott Broidy, a top fundraiser for Trump’s
2016 campaign and presidential inauguration. Broidy resigned from his post as a deputy finance chair for the Republican National Committee after reporting by McClatchy and other outlets showed that he had tried to trade political access to win lucrative foreign defense contracts for Circinus and that he had paid $1.6 million in hush money to a former Playboy Playmate he had impregnated and pressured to have an abortion.
Broidy was later charged with foreign lobbying violations but received a pardon from Trump on the last day of his presidency. Circinus never took a PPP loan. Stan Manning, the company’s chief operating officer, said the defense contractor first applied for the loan because of economic uncertainty, but withdrew the request when conditions improved.
“When it became clear that this loan would not be necessary for our business, we withdrew our loan request so that other companies with greater needs for the emergency funds could access them,” Manning said.
A total of 11 businesses tied to New York real estate investor Steve Witkoff, a longtime friend of Trump’s who donated more than
$1.2 million to committees supporting Trump between 2016 and 2020, appear in the data on canceled loans, initially approved for more than $2.8 million in April. Four other Witkoff-connected businesses were approved for loans that month, totaling more than $10.6 million, that have not been canceled. Witkoff was a member of Trump’s Great American Economic
Revival Industry Group as one of the representatives for the real estate industry. Witkoff’s company did not respond to multiple requests for comment.
While Witkoff made his name in New York, he now, like his friend Trump, calls South Florida home. He purchased a $10 million waterfront home on Sunset Island in 2019 and opened an office in Miami soon after. But his recent experiences in Florida haven’t all been sunny. Commercial mortgage lender Ladder Capital foreclosed on Witkoff’s South Beach hotel, the Washington Park Hotel, last summer, and it was sold last month. The business that owned the Washington Park, a joint venture between Witkoff and the private equity firm the Carlyle Group, was one of the 11 Witkoff-related businesses that had its PPP loan canceled.
The Florida Department of Health’s COVID-19 dashboard reported 3,699 new confirmed cases and 31 total deaths, the fewest total deaths on the daily report since Nov. 15.
That was also a Sunday, usually the day with the lowest case numbers and death toll because data tends to be collected and entered at a lower rate on the weekends. Still, there have been quite a few Sundays between Nov. 15 and March 14.
For the pandemic, Florida reports 1,976,808 cases, 32,255 resident deaths and 32,860 total deaths.
Saturday’s state-wide positive test rate of 5.69% was the highest since Monday, but the 11th consecutive day under 6%.
COVID VACCINES IN FLORIDA AND SOUTH FLORIDA
Florida: The state’s vaccination report says another 22,049 have received either the one-shot Johnson & Johnson vaccine or their second COVID vaccine dose of the two-shot vaccines, meaning 2,323,366 are fully vaccinated.
Miami-Dade County: The state reported 4,263 people completed their vaccinations, meaning 251,973 in Miami-Dade are fully vaccinated.
Broward: Another 1,046 people completed their vaccinations, putting Broward’s completed vaccine total at 199,626
Palm Beach: After 2,330 people completed their vaccine treatment, 222,294 in Palm Beach County have completed a vaccine regimen.
Monroe: Another 17 people completed their vaccine shot treatment. Overall, 9,153 have done so.
CONFIRMED COVID-19 CASES IN SOUTH FLORIDA
Miami-Dade County reported 751 more people who tested positive and nine more COVID-19 deaths, putting its pandemic totals at 426,900 cases and 5,660 deaths.
The positive test rate on Saturday was 5.79%, according to the county-by-county breakdown, the fifth consecuitve day and eighth of the last 11 under 8%.
Broward County reported another 496 cases and six deaths, moving its totals to 203,832 cases and 2,447 deaths.
The positive test rate was 5.82% on Saturday, continuing the up-down-up-down trend of the last six days.
Palm Beach County reported 360 new cases (125,866 for the pandemic) and one death (2,546).
Saturday’s positive rate was 6.68%, the first over 6% since March 3 and the highest since Feb. 28.
Monroe County reported nine new cases and zero deaths. Pandemic totals in the Keys are 6,116 cases and 47 deaths.
CURRENT HOSPITALIZATIONS
Government officials use current hospitalizations to decide the next action in dealing with the pandemic. On the state level, this has been steadily falling over the last month.
The Florida Agency for Health Care Administration reports the number of patients hospitalized statewide with a “primary diagnosis of COVID.” The data, which is updated at least every hour, does not distinguish between the number of COVID-19 patients in hospital intensive care units and those in acute-care beds, which require less attention from nurses.
As of 2:02 p.m Sunday, the agency said there were 2,868 people hospitalized, a 98-person drop from 5:15 p.m. Saturday and another plunge of over 439 from last Sunday. South Florida’s counties generally dropped from Saturday: Miami-Dade plummented 62 to 526; Broward, up one to 426; Palm Beach, down nine to 177; and Monroe, down one to two.
Florida’s hospitalization data does not always match the hospitalization data reported in MiamiDade’s New Normal Dashboard. Officials say this could be for a number of reasons, including the frequency of daily updates.
Sunday, Miami-Dade’s New Normal Dashboard said hospitals reported 617 COVID-19 patients, up eight from Saturday’s report and even with a week ago. The number of patients in Intensive Care Unit Beds was 166 at Sunday’s report, same as Saturday’s report and down three from seven days ago.