Majority of COVID-19 PPP loan money goes to just 15% of companies that apply – CBS San Francisco
CONCORD (KPIX 5) – The federal paycheck protection program was created to help struggling small businesses during the COVID-19 pandemic, but data just released by the Small Business Administration shows some unlikely companies get the lion’s share of the money.
Small businesses are the backbone of the US economy. They employ more people and generate more tax revenue than large companies. This is what the Paycheck Protection Program was supposed to help.
But data from the Small Business Administration shows hundreds of billions of dollars went to wealthier, well-connected companies, including the LA Lakers, who returned the money after it was revealed.
Kanye West’s clothing company Yeezy – which only employs 106 people – obtained a loan of 2 to 5 million dollars. And even an anti-tax lobby group called Americans for Tax Reform was successful in getting approval for a loan of $ 350,000 of taxpayer money.
Marc Herbert. California vice president of the Small Business Majority advocacy group says there isn’t much left for small businesses.
“About 2,500 companies here in California have received a PPP loan of less than $ 1,000,” Herbert said. “There is a company with 13 employees that received a $ 1 PPP loan.
Businesses are supposed to be eligible for 2.5 times their monthly payroll amount, but small businesses struggle to get it. Herbert says the problem is that the program is administered by the banks which charge a fee based on the amount of the loan. Thus, companies with a comfortable banking relationship or asking for millions of dollars get priority status.
“So the micro businesses, the businesses that make up our inner cities and our neighborhoods, it’s not necessarily the businesses that were on the front lines here,” Herbert said.
“It’s impossible that the Lakers, worth more than $ 2.3 billion, got a loan of $ 20 million before me!” said David Morales, co-owner of the San Francisco Beauty Box salon.
His business has been closed for months, so he applied for thousands – not millions – and applied to eight different banks. But because his workers were independent contractors, they didn’t count towards the loan application, and he ended up getting just over half of the amount he asked for.
“The federal government failed to understand that although we are self-employed, we still create jobs and opportunities for entrepreneurs to earn a living in our shop. So I’m also worried about them, ”Morales said.
The most spectacular statistic to draw from data released by the Small Business Administration was that – of the $ 500 billion the government has distributed so far – three-quarters of the money was concentrated in just 15% of businesses. asking for loans.