WASHINGTON–Detailed loan information released by the SBA on the Paycheck Protection Program has revealed that just 1% of the program’s 5.2 million borrowers — those seeking $1.4 million and above — received more than a quarter of the $523 billion disbursed.
Approximately 600 businesses — including powerful law firms like Boies Schiller Flexner, restaurants like a steakhouse chain started by Ted Turner, as well as the operator of New York’s biggest horse tracks — received the maximum loan amount of $10 million, according to the data, the New York Times reported.
The PPP was generally designed for companies with 500 or fewer workers and offered forgivable loans for keeping employees on the payroll.
“But the program allowed businesses to take enough money to cover only a couple of months’ expenses, and it has come under criticism for its poorly defined rules and a hasty and haphazard rollout that allowed fraudsters to tap into the money, which will take years of litigation to sort out,” the Times noted.
The SBA loan data was released under an order by Judge James E. Boasberg of the U.S. District Court in Washington, who rejected the agency’s request to keep the information confidential.
Companies Receiving the Max
The Times’ analysis found the companies that received the maximum $10 million PPP loan include dozens of restaurant chains such as Ted’s Montana Grill, which was started by Ted Turner; TGI Fridays; P.F. Chang’s; Black Angus Steakhouse; and Legal Sea Foods. They took advantage of an exception the restaurant industry lobbied for to make chains eligible for the aid money. The New York Racing Association, which operates Aqueduct Racetrack, Saratoga Race Course and Belmont Park, the home of the Belmont Stakes, also received the maximum loan.
Prominent law firms like Boies Schiller Flexner, the high-priced firm run by David Boies, and Kasowitz Benson Torres, founded and run by President Trump’s longtime personal lawyer, Marc E. Kasowitz, also collected loans for $10 million. It was previously known that both firms received large loans, but the exact amount had not been disclosed, the Times reported.
Lenders, meanwhile, collected $18 billion in fees, according to the New York Times analysis of the SBA data. The largest payment went to JPMorgan Chase, which stands to collect just over $1 billion in fees on more than 280,000 loans worth a total of $29 billion. The runner-up is Bank of America, which will earn $947 million in fees on around 343,400 loans worth nearly $26 billion, the Times said.
Both banks have pledged to donate any profits they earn from the program, but executives from each have told analysts that their expenses were so high that there may not be much, if any, left to give after the loans are settled.
Job Losses
Separately, the Times reported an analysis by Gusto, a payroll provider for small companies, found the chances that workers would lose their job at a company that took a PPP loan increased by 25% during the week that the loan’s restrictions on job reductions ended. Gusto estimated that 232,000 jobs may have been eliminated as the restrictions expired the report added.
The Times further noted that as of Nov. 22, lenders had submitted 595,000 loan forgiveness applications to the SBA, representing about 11% of the program’s 5.2 million borrowers. The agency said it had made payments to lenders on 367,000 of those loans.
900,000 Records Missing Info
Meanwhile, the Wall Street Journal’s review of the SBA data found that more than 900,000 records didn’t have information on how many jobs the loan supported or reported zero jobs were supported, despite the program’s mandate that borrowers spend most of their loan to keep workers on payrolls. More than 3,000 records omit details on some part of the borrower’s address. Several dozen include no business name, the Journal stated.
An SBA spokesperson told the Journal that in said cases where information such as names and addresses are missing indicate a lender didn’t provide those details to the agency’s system or the borrower didn’t provide the information to the lender. Borrowers weren’t required to provide information on their applications about the number of jobs supported or retained, the spokesperson said.
The Journal report noted that the SBA’s Inspector General said in October that there were “strong indicators of widespread potential abuse and fraud in the PPP.” The watchdog counted tens of thousands of companies that received PPP loans for which they appear to have been ineligible, such as corporations created after the pandemic began, the report stated.