Help for small businesses has gone beyond hard-hit businesses, data shows

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WASHINGTON (AP) – The government on Monday identified around 650,000 small businesses and mostly nonprofits that received taxpayer money through a federal program designed to mitigate job losses from the coronavirus, but that has also benefited rich, well-connected businesses and some celebrity-owned businesses.

The Treasury Department’s Payroll Protection Program has approved applicants from a wide range of industries. Some that have been less directly affected by the pandemic, such as manufacturing and construction, have received a greater proportion of loans than the hard-hit restaurant and hospitality industries. Many law firms and private equity firms have also obtained loans.

Politician-owned businesses have also borrowed from the program, including a minor league baseball team owned by the Ohio governor’s family. A major franchisee of Wendy’s, Taco Bell and Pizza Hut restaurants, whose CEO is one of President Donald Trump’s major donors, has received loans totaling $ 15 million to $ 30 million.

Other recipients included Kanye West’s clothing and sneakers brand Yeezy, the professional basketball league of Ice Cube, Planned Parenthood clinics in more than two dozen states, the nonprofit arm of the anti-tax group led by Grover Norquist, Americans for Tax Reform, as well as Rosenblatt. Securities, one of the biggest names on the New York Stock Exchange floor.

As of June 30, the program had distributed $ 521 billion. On Monday, the Treasury Department identified only a fraction of total borrowers, only naming companies that raised more than $ 150,000. These businesses represented less than 15% of the nearly 5 million small businesses and organizations that received loans.

Sen. Marco Rubio, Republican of Florida and chairman of the small business committee that designed the program, said the release of the data provided “much needed transparency.” He called the program a “historic lifeline” for small businesses during the pandemic.

Democratic Senate Leader Chuck Schumer described the release of the data as a “good start” but lamented it took so long and “so much pressure from Democrats” to make the information public . He said more transparency was needed “to make sure those taxpayer dollars go where Congress intends – to really small, underbanked small businesses.”

Economists generally credit the program for helping to prevent the labor market collapse from deepening. Employers created 7.5 million jobs in May and June, a sharp increase likely due in part to P3s. The economy still has nearly 15 million fewer jobs than before the pandemic.

Federal Reserve Research found this companies with less than 50 workers before the pandemic saw their hiring increase by 12% in May, while jobs increased by only 5% at large companies, suggesting that P3s helped fuel rehiring .

But the program was only meant to get the economy through a brief hiatus from the pandemic, which now threatens to have longer-term impact. The Treasury Department initially required loans to be spent within eight weeks of receipt, although this was later extended to 24 weeks.

Many small businesses have already spent their PPP money and still face significantly lower demand as consumers are reluctant to revert to previous habits of shopping, going to gyms, or dining out. Texas, Florida, California, New York and other states have canceled their reopens, closing bars and delaying the start of indoor dining.

“The biggest problem is that PPP is short-term help,” said Adam Ozimek, chief economist at Upwork, an independent platform. “And now we are dealing with a medium to long term problem.”

A survey by the National Federation of Independent Business found that in mid-June, 14% of small businesses that borrowed from PPP expected to have to fire some workers when their loans ran out.

The program has provided loans of up to $ 10 million to small businesses to help them recover from government-ordered shutdowns and lost revenue caused by the virus. The average loan amount for the entire program was $ 107,000, the Treasury Department said in a general summary from the program.

Loans can be canceled if the companies primarily use the money to continue paying workers. The program was originally scheduled to expire on June 30, but was extended last week to August 8, with $ 132 billion still available.

The beneficiaries employed 51 million people before the start of the pandemic, Treasury Secretary Steven Mnuchin said. This represents about 85% of all workers in companies with less than 500 employees. The government will not know how many of these jobs were actually saved until the companies ask for loan cancellations, a process that is only just beginning.

A senior administration official said Monday that some small businesses “will need additional support” in the coming months.

The public may never know the identity of more than 80% of the nearly 5 million beneficiaries to date, as the administration has refused to release details of loans under $ 150,000. This secrecy sparked legal action by news agencies, including the Associated Press.

The Treasury Department has only released dollar ranges for loan amounts, rather than exact numbers.

High-level evangelical mega-churches, including several with pastors who have supported Trump, have also received loans after religious entities were allowed to ask for help even though they were only performing denominational functions.

Among the Trump-linked churches that received PPP loans was First Baptist Dallas, the mega-church in Texas where White House senior pastor and ally Robert Jeffress hosted Vice President Mike Pence for a front service. The 4th of July. Jeffress Church said it has kept nearly 300 jobs thanks to its loan of between $ 2 million and $ 5 million.

Some big Trump supporters have also benefited. Muy Brands Inc., a San Antonio, Texas-based franchisee with more than 750 Wendy’s, Taco Bell and Pizza Hut restaurants, received between $ 15 million and $ 30 million between three entities. Muy Brands CEO James Bodenstedt is a major donor to the president. He has donated $ 300,000 to the Trump Victory PAC since the start of this year, according to federal campaign finance records.

The hardest hit restaurant and hospitality industries lost nearly half of their jobs before the pandemic in March and April. They placed fifth on a recipient list. Health care, professional and business services, construction and manufacturing received a larger share of loans.

And according to an analysis by Beth Ann Bovino, chief US economist at Standard & Poor’s, some states with the smallest increases in unemployment due to the pandemic got more loans than the hardest hit states.

“It didn’t reach the industries that needed it, and it looked like it wasn’t reaching the hardest hit states,” Bovino said.

Media companies, including Newsday and American Media, former owner of the National Enquirer, have secured loans of up to $ 5 million.

The data gave little detail on loans to minority-owned businesses. Companies were not required to provide demographic data on their applications, and many race and gender entries contained “unanswered”.

However, many minority-owned businesses are owner-run, with few or no employees, so their loan amounts were likely less than $ 150,000 and therefore not included in the data release. . Senior administration officials who briefed reporters ahead of the publication said they hoped to get more information when homeowners submit loan cancellation requests in the coming months.

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Associated Press editors Farnoush Amiri in Columbus, Ohio, Dee-Ann Durbin in Detroit, Holly Ramer in Concord, New Hampshire, and Elana Schor in New York contributed to this report.

Copyright 2020 Associated Press. All rights reserved.


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