Trump Administration’s Paycheck Protection Program Has Been One Mishap After Another
The program has left many of the businesses impacted by the pandemic empty-handed as it failed to take into account the widely varying needs and limitations of small businesses around the country. At the same time, large chains and other publicly traded companies have jumped to the front of the line and received millions in taxpayer-funded bailout money.
While these are just numbers on paper, real businesses, real families, and real peoples’ paychecks hang in the balance. The Trump administration’s handling of the Paycheck Protection Program and the economy’s recovery as a whole has been a disaster, and the country is hurting for it -- especially small businesses, minority-owned businesses, and working families.”
Kyle Herrig, president of Accountable.US
New numbers show how the program has been detrimental to minority-owned businesses:
- 90% of businesses owned by people of color will not be able to access PPP funding, according to the Center for Responsible Lending.
- A recent survey found that only 12% of Black and Latino/a business owners received the SBA relief they had applied for, with 26% saying they “received only a fraction of what they had requested.”
- A recent report by the National Bureau of Economic Research found that the total number of Black-owned businesses in the U.S. fell 41%, from 1.1 million in February to 640,000 in April, because of fallout from the coronavirus.
- Non-employer businesses had to wait a week before applying, which presented a problem because nearly 95% of Black-owned firms were non-employers and 91% of Latino-owned firms were non-employers. In comparison, 78% of white firms are non-employer businesses.
- 40% of black-owned businesses are not expected to survive coronavirus, according to a study by the University of California at Santa Cruz.
Special interests have thrived while small business go under:
- Bank lenders often preselected customers based on preexisting relationships. A study by the Center for Responsible Lending found that twice as many white-owned businesses had accessed credit from a bank in the last 5 years than black-owned businesses.
- The CARES Act included a special-interest carveout for chain restaurants and hotels, written in technical language concerning the North American Industry Classification System, that allowed companies to qualify for treatment as a small business even if the chain has more than 500 employees.
- As of early May, more than 100,000 small businesses had shuttered as a result of the pandemic, according to study by University of Illinois, Harvard Business School, Harvard University and the University of Chicago
The program grossly mismanaged money, giving funds to businesses who should have never received it and implementing no safeguards to ensure the money was being used properly:
- As of Tuesday, the government has approved 4.6 million loans worth more than $513 billion. Those have reached a fraction of the 31.7 million small businesses in the U.S., which includes 25.7 million firms without employees, according to the Small Business Administration.
- As of Tuesday, more than $130 billion was left in the fund. Even more striking was the fact that on many days last month, more money was being returned than borrowed, according to data from the Small Business Administration — highlighting its messy execution and confusing rules that deterred some small businesses from using the money.