Reports: Data from U.S. loan program riddled with errors

WASHINGTON — Data on the federal government’s $521 billion coronavirus bailout program for businesses contains numerous inaccuracies, including critical data on job retention, loan values and loans returned or canceled, according to media reports and federal officials.

“I’m very nervous about [the SBA data],” said Rep. Jim Himes, D-Conn. “First of all, it was a huge struggle to get the information on the PPP loans. And then when we got it ... there’s questions now about the reliability of the data.”

Undercutting a Trump administration claim that the Paycheck Protection Program rescued 51 million jobs, multiple news outlets have

found that many companies reported in the database to have “retained” far more workers than they employ. In some cases, the Small Business Administration’s job claims for entire industries surpasses the total number of workers in those sectors, the Washington Post found.

In Connecticut, where the SBA has approved 60,948 loans, 5,624 companies reported they would retain zero jobs through the program and 3,853 left that information blank, according to the SBA database. Some loans in other places list negative job numbers. The database also did not include information on loans that were canceled or returned to the SBA before July, the SBA said. That means that companies like Shake Shack, which took out a $10 million PPP loan and then returned it after public outcry, were not included in the database.

The SBA said “The public PPP data includes only active loans.” But some businesses contend that’s not true. Choate Rosemary Hall, an elite boarding school in Wallingford, is listed in the SBA database as receiving a loan between $5 million and $10 million (the database also provides ranges for loan amounts, not exact numbers).

“Choate Rosemary Hall has not accepted any PPP loans,” said Alison Cady, director of Strategic Planning and Communications for Choate. “Like many schools, Choate Rosemary Hall initiated the application while we investigated the terms of the program. When we determined that we did not fit the organizations and businesses the program was designed to support, the school withdrew its application. The application was approved despite our withdrawal but no funds were disbursed.”

Although the SBA regularly publishes detailed information on recipients in its other loan programs, the agency was reluctant the release public information on Paycheck Protection Program loans.

Many loans went to needy companies, but in an effort to get money out the door as fast as possible, the SBA also waived some underwriting requirements from lenders “leaving the program more susceptible to fraudulent applications,” the U.S. Government Accountability Office found.

SBA released partial data on the program last week, but chose to conceal the names of about 85 percent of the 4.9 million loan recipients because they received loans of less than $150,000.

Danielle Brian, executive director on the Project on Government Oversight, said the inaccurate jobs retention information is either “bad data” or a problem with the loan application — what information the government asked for or what companies chose to disclose.

Bloomberg News found the issue was the PPP application didn’t asked about jobs retained by the loan, but did have a box for number of employees and some companies left that information blank.

Thus, who did and didn’t receive PPP money is murky. The SBA said it did not disclose the names of small PPP loan recipients to protect their proprietary business information. The SBA’s decision makes it harder to know if the loans reached the desperate Main Street companies it was intended to rescue, outside of anecdotes. It also could conceal how many well-connected companies secured the smaller loans.

Previous reporting revealed publicly traded companies ranging from very large hotel chains and luxury cruise companies to a local fuel business got PPP loans. The New York Times found that banks and big lenders served their wealthy clients first with “concierge treatment,” handing them loans before smaller firms or businesses new to them and contributing to the quick evaporation of the first round of billions of PPP dollars.

The SBA said it would review loans of $2 million or more (that’s over 30,000 loans) to ensure they were made to companies who needed them, but the Government Accountability Office found as of June 15, the SBA had not definitive plans to complete the review.

A lack of clarity on exactly who got the money and how much makes assessing the effectiveness and fairness of the program tougher — particularly relevant at a time when Congress is considering passing a new round of coronavirus relief this month that is intended to be more targeted to the needy than the past programs.

“Of course there were and will be problems and we need to fix those problems,” Himes said. “If there was fraud, we need to go after that fraud. But I can tell you anecdotally, the PPP did a lot of good for a lot of employees in my district.”

Several news organizations are suing the SBA under the Freedom of Information Action to force the agency to release more data on the PPP program.

It also remains unclear whether the agency will release information later on loan forgiveness for these companies — key for determining whether the money becomes a grant for companies and how much of the funds are returned to government coffers.