The revelation that wealthy businesses and nonprofit organizations received small-business relief loans is putting pressure on Congress to put new restrictions and limits on aid in the next relief bill for companies and employees.
The Trump administration released on Monday the names of hundreds of thousands of businesses and nonprofit organizations that received at least $150,000 in funding from government-backed forgivable loans. The list of organizations included multiple businesses tied to members of congress, top lobbying groups and law firms, private equity-backed restaurant groups like TGI Friday’s, a dating app called Grindr, and even billionaire Kanye West’s clothing brand.
As Congress considers the next round of coronavirus relief for employers, these revelations reignite concerns that businesses with large resources are receiving government support while smaller and more vulnerable businesses are being left behind.
“Big businesses that can keep people on the payroll without a [Paycheck Protection Program] loan simply should not get one,” said Lisa Gilbert, executive vice president of the consumer advocacy group Public Citizen.
“Taxpayer money [should be] spent to ensure that entities that truly need money to keep regular Americans employed receive it,” Gilbert added.
The Small Business Administration’s relief program, called the Paycheck Protection Program, provides forgivable loans through lending institutions to small businesses that were hurt by the pandemic as long as they maintain payrolls. The program was initially funded with $350 billion as part of the massive $2.3 trillion CARES Act relief package. The program was given an additional $321 billion in April after the initial $350 billion ran out in just two weeks.
Sens. Marco Rubio, Ben Cardin, Jeanne Shaheen, and Susan Collins, a bipartisan group of legislators who co-authored the original small-business relief program, are leading the negotiations on a targeted second round of loans, according to a spokesman for Rubio.
“The next phase of help for #smallbusiness will be very targeted,” tweeted Rubio in June.
“It will focus on industries and communities disproportionately impacted by the pandemic,” said Rubio, the Florida Republican who chairs the Senate Committee on Small Business and Entrepreneurship.
Rubio also told reporters at the end of June that he’s developing a program to provide financial assistance for businesses in underserved communities or opportunity zones. He added that the $130 billion in small-business relief funds that is currently left over from the $671 billion loan program will not be repurposed for anything else but will instead provide a “foundation for building a second round of assistance in a more targeted way.”
Collins, a Republican from Maine, did not address why the new loan data showed that some well-heeled businesses received small-business relief loans but told the Washington Examiner that “the loan data released by the SBA show the strong demand for the Paycheck Protection Program across nearly every sector of our economy.”
Collins also said that as the coronavirus lockdowns and other restrictions continue, it has become clear that there is a need to further assist some small employers to help them survive and retain their employees.
Some progressive advocates have said that aid to state and local governments should be a top priority in the next coronavirus relief bill in order to help all small businesses.
“Most state and local governments also have programs aimed at helping the smallest businesses, as those businesses are often a lifeline in local communities,” said Alexandra Thornton, senior director of tax policy at the Center for American Progress, a liberal think tank.
“Any federal assistance to small businesses should be targeted to the very smallest businesses, those with less than 20 employees, that are minority- or women-owned or are located in underserved areas,” said Thornton.
Democratic Sens. Chris Coons from Delaware, Cardin from Maryland, and Shaheen from New Hampshire have already introduced new small-business relief legislation that targets businesses with 100 or fewer employees and reserves $25 billion for small businesses with 10 or fewer employees.
“Multiple studies have shown that the businesses most likely to close permanently as a result of the COVID-19 recession are smaller, younger, minority- and women-owned small businesses,” Cardin told the Washington Examiner.
