New PPP Data Show Coronavirus Aid Flowed to Large and Small Firms Alike

Judge ordered SBA to release detailed loan information in response to lawsuit by news organizations under Freedom of Information Act

By Amara Omeokwe and Anthony DeBarros of The WSJ. Excerpts:

"The Small Business Administration’s release of new information on borrowers under the Paycheck Protection Program highlights how money flowed to both mom-and-pop businesses and larger firms, and it raises questions about the agency’s ability to track key information about aid recipients."

"'The data also signal the difficulty of tracking borrower information in a massive program where the responsible agency didn’t issue loans directly. Financial institutions processed PPP borrower applications and funded and disbursed the loans, which are backed by the SBA.

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.

An SBA spokesman 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 spokesman said."

"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."

For "PPP’s first iteration . . . PPP applicants were required to provide little documentation and only had to certify that economic uncertainty made the loan request necessary to support business operations.

Those relatively low barriers helped spur an initial rush for the program, and some of the loans flowed to larger, well-known brands that later returned the funds after public backlash. Tuesday’s disclosures showed some large restaurant chains were among those borrowers that received the program’s maximum loan amount of $10 million."