Firms with lawmaker ties aided by PPP
Auto dealers, restaurants among loan recipients
WASHINGTON – Businesses owned by several members of Congress or their families received federal Paycheck Protection Program loans designed to help small firms weather the economic fallout of the coronavirus, according to information the Trump administration released Monday.
The list of lawmaker-connected businesses includes car dealerships, casinos, construction companies and restaurants. All were deemed eligible by the Small Business Administration for the PPP loans, a centerpiece of the federal government’s response to the COVID-19 pandemic, which has left millions out of work and upended daily life in America.
Recipients with congressional ties were among more than 660,000 businesses whose names were released after weeks of pressure by watchdog groups, media organizations and lawmakers. Names of entities that received more than $150,000 and up to the $10 million maximum were made public.
The businesses include a wide range of entities in every state, including restaurant franchises, athletic organizations and strip clubs. Money also went to nonprofits, including advocacy groups representing sportsmen, religious groups and former members of Congress, according to the list released jointly by the Treasury Department and Small Business Administration.
Among the recipients were 426 publicly traded companies, including Shake Shack and the parent company of Ruth’s Chris steak houses, based on public filings. It also included the Los Angeles Lakers professional basketball club. Some of those entities, including Shake Shack, Ruth’s Chris and the Lakers, returned the money after a public backlash.
Before the release of the data Monday, three members of Congress said they or their spouses had received PPP loans: Rep. Roger Williams, R-Texas; Rep. Vicky Hartzler, R-Mo.; and Rep.
Susie Lee, D-Nev.
Williams’ auto dealership in north Texas received a loan, the Dallas Morning News reported in May. Rep. Vicky Hartzler whose family owns several farms and equipment suppliers in the Midwest, also applied for and received a loan.
“Like millions of small businesses across the country and nearly 47,000 small businesses in Missouri, our family businesses applied for and received PPP loans to ensure our employees could remain employed and the business could pay expenses,” Hartzler said in an April 29 statement posted on her congressional website.
Full House Resorts, a Nevada-based company run by Lee’s husband Daniel, received two loans totaling $5.6 million, following a change that the congresswoman had pushed for in the program’s regulations to include gaming operations.
“The Paycheck Protection Program was designed to help keep workers on payroll and return to work quickly after we have successfully overcome this pandemic,” Lee wrote in a April 7 letter to Treasury Secretary Steve Mnuchin and Small Business Administrator Jovita Carranza. “Unfortunately, the regulatory guidance as currently written fails to do so for significant portions of southern Nevada’s small business community.”
The loans, “principally to rehire several hundred employees” at two of its casinos per a public filing were first reported by the Daily Beast. Lee told the news outlet through a spokesman that she had no role in the company’s decision to apply for the loans.
A fourth lawmaker, Rep. Debbie Mucarsel-Powell, D-Fla., has a husband who is a vice president of Fiesta Restaurant Group, a publicly traded firms that received two loans totaling
$15 million. Both the loans have been returned.
After initially saying he would not release the names of loan recipients, Mnuchin changed course and decided the information would be released.
The release of the list Monday revealed other lawmakers whose businesses or spouses’ business got loans, including:
• Rep. Mike Kelly, R-Pa., whose car dealerships received three loans between $350,000 and $1 million.
• Rep. Kevin Hern, R-Okla., whose company held in a family trust controlling five McDonald’s franchises received a loan between $1 million and $2 million.
• Rep. Markwayne Mullin, R-Okla., whose plumbing and contracting firms received four loans totaling between $800,000 and $2 million.
• Rep. Rick Allen, R-Ga., whose construction company in Augusta received between $350,000 and $1 million
• Rep. Nita Lowey, D-N.Y., whose husband’s law firm Lowey Dannenberg P.C. received a loan between $1 million and 2 million. Her husband, Stephen Lowey, is listed as chairman emeritus on the firm’s website and is retired from the firm.
Kelly spokesperson Andrew Eisenberger said the congressman was “not involved in the day to day operations of his auto dealerships and was not part of the discussions between the business and the PPP lender.” Kelly’s business employed over 200 people, Eisenberger said.
Hern chief of staff Cameron Foster said the congressman was also “not involved in the day to day operations of the business” but after getting the loan, none of the business’ employees had to file for unemployment.
The loan amounts released by the SBA are given in ranges, such as between $1 million and $2 million, making an exact amount difficult to determine in some cases.
The decision to make the data public came after a House panel created to oversee the disbursement and management of federal stimulus funds wrote a letter last month to Mnuchin, Caranza and the heads of eight large banks demanding information about the program and its recipients.
The $660 billion program is widely considered a success. The SBA said PPP loans supported more than 51 millions jobs since it began in April, with health care, professional and technical services, construction and manufacturing among the biggest beneficiaries. But there have been controversies. The initial rollout was marked by technical glitches and shifting rules that created confusion. Private lenders who processed applications were accused of pushing favored clients to the front of the line past small companies such as nail salons and florists.
According to the SBA, about 80% (3.8 million) of the roughly 4.8 million PPP recipients collectively have received about 20% ($105.3 billion) of the nearly $519 billion the administration has provided so far.
The program offers firms employing 500 or fewer workers low-interest loans of up to $10 million to cover their pandemic-related costs. Companies apply for the money through banks and other lenders and loans are underwritten by the SBA.
Designed to cover eight weeks of expenses such as payroll and rent, the loans do not have to be paid back if at least 75% of the money is spent keeping or rehiring workers. Otherwise, it carries a 1% interest rate and must be repaid within two years. The 75% threshold was dropped to 60% after restaurants complained the program failed to take into account rent-heavy businesses such as theirs.
The program has about $130 billion left to spend although lawmakers and the Trump administration are in talks to tweak the PPP to reach hard-hit businesses such as restaurants and hotels that have had trouble making use of the financial help.