PPP loan recipients remain a mystery
Trump administration called to release list of who got taxpayer money
In mid-May, more than a month after it had first applied for help, the Birth Defect Center for Children was finally approved for an $11,285 loan through the federal government’s “Paycheck Protection Program.”
The money — a tiny sliver of the more than $500 billion the federal government has distributed through the program meant to help small businesses and nonprofits — has been a lifeline for the Orlando-based center amid the economic crisis triggered by the novel coronavirus, said Executive Director Betty Mekdeci.
Mekdeci thinks the taxpayerfunded program has worked well. But she knows not everyone else is so sure. So she wants the federal government to prove it — by releasing a full list of everyone who got money through the program, and how much they got.
“I think that would contribute to the transparency of the program and it would alleviate a lot of the criticism people have had of it,” Mekdeci said.
Yet the Trump Administration has so far refused to publicly disclose PPP recipients — and it might not do so at all.
Steve Mnuchin, the former hedge fund manager and Goldman Sachs banker who is now U.S. Treasury secretary, told Congress last week that the agency considers the names and amounts of PPP loans to be “proprietary information,” because the loan amounts are based on a company’s payroll costs.
Mnuchin has backtracked this week — but only slightly. On Monday, he wrote on Twitter that he would have “discussions” with members of Congress about striking “the appropriate balance” between transparency and confiden
tiality.
Congress has spent more than $650 billion on the Paycheck Protection Program, making it one of the government’s largest coronavirus economic rescue programs. It’s supposed to help sustain small businesses through the pandemic by providing low-interest loans of up to $10 million that turn into grants that don’t have to be repaid if most of the money is spent paying workers.
The U.S. Small Business Administration says it has approved more than 4.5 million PPP loans worth more than $512 billion so far. And economists think the program likely contributed to a stronger-than-expected jobs report in May, when the unemployment rate declined from 14.7 percent to 13.3 percent.
At the same time, the program has been marred by repeated controversies. Early on, a number of larger, publicly traded companies raced to claim the loans — often borrowing through multiple corporate entities in order to sidestep the $10 million cap. The nation’s largest car-seller, Fort Lauderdale-based AutoNation Inc., obtained nearly $80 million in loans, and the parent company of Ruth’s Chris Steak House, Winter Park-based Ruth’s Hospitality Group Inc., obtained $20 million; both companies returned the money amid the ensuing public uproar.
But very little is known about the private companies that have tapped into the program — and private companies have received almost all of the money. Publicly traded companies have disclosed about $1 billion worth of PPP loans, according to a database compiled by FactSquared. That’s less than 1 percent of all the PPP money spent so far.
There have been anecdotal reports. Last month, the Orlando Sentinel reported that Westgate Resorts — the big timeshare company led by multimillionaire David Siegel — obtained PPP loans and offered to use some of the money paying travel bloggers to promote its properties. The company later said it never used any of its PPP proceeds that way.
The Washington Post reported that The Aspen Institute, a think tank with a $115 million endowment supported by several billionaires, got an $8 million PPP loan, which the organization subsequently returned. Anti-charter-school activists found 27 charter school operators that obtained at least $48 million in PPP funds by watching school-board meetings and reviewing minutes and local news reports, according to the New York Times. And some conservative lawmakers are upset that affiliates of Planned Parenthood received more than $80 million in PPP loans.
Florida U.S. Sen. Marco Rubio, who helped write the PPP law, once vowed that Congress would force the Trump administration to disclose PPP recipients if the administration did not do so on its own. But he’s since backed away from that pledge.
Rubio now says that Congress and the administration may compromise and identify only companies that received large loans.
“No dispute over larger loans recipients being disclosed,” Rubio wrote Tuesday on Twitter. “Only issue still being discussed with administration is how to treat smaller loans to mostly micro-business, sole proprietors & independent contractors.”
But keeping details about smaller loans secret still risks masking over issues.
For instance, one of the most controversial users of the PPP system was Monty Bennett, a Texas hotel magnate who controls three publicly traded companies. Those companies together own more than 120 hotels around the country, including Ritz-Carltons in Sarasota, Atlanta and Lake Tahoe, Calif.
Using a web of subsidiaries, Bennett’s companies obtained 73 PPP loans worth more than $74 million and applied for another 64 loans worth more than $52 million, according to investor disclosures filed in late April.
Nearly three-quarter of those loans were for less than $1 million. More than half were for less than $500,000. One was for $36,510.
Bennett’s companies ultimately returned the loans after the Treasury Department updated the PPP rules in response to national outrage.
Mekdeci, who runs the birth defect non-profit in Orlando, said full transparency is the only way to ensure taxpayers have confidence in the PPP system – and are willing to continue to support it and other economic-rescue efforts.
“I think it’s important to show that the system works and it wasn’t just that they took a bunch of tax money and frittered it away,” she said. “I would like for people to see that it really did help companies and nonprofits and people who had no other recourse.”