Majority Of COVID-19 PPP Loan Money Going To Only 15% Of Businesses Applying
CONCORD (KPIX 5) -- The federal Paycheck Protection Program was created to help small businesses struggling during the COVID-19 pandemic, but data just released from the Small Business Administration shows that some unlikely businesses are getting the lion's share of the money.
Small businesses are the backbone of the American economy. They employ more people and generate more tax revenue than large corporations. They are what the Paycheck Protection Program was supposed to help.
But the Small Business Administration's data shows hundreds of billions of dollars have gone to wealthier, well-connected companies including the LA Lakers, which returned the money after it was revealed.
Kanye West's clothing company Yeezy -- which only employs 106 people -- got a loan of between 2 and 5 million dollars. And even an anti-tax lobbying group called Americans for Tax Reform managed to get approved for a loan of $350,000 of taxpayer money.
Mark Herbert. the California Vice President of the advocacy group Small Business Majority, says there isn't much left over for actual small businesses.
"About 2,500 businesses here in California received a PPP loan of less than $1,000," Herbert said. "There's one business that has 13 employees that received a PPP loan for one dollar."
Companies are supposed to be eligible for 2.5 times their monthly payroll amount, but smaller businesses are having a difficult time getting it. Herbert says the problem is the program is administered through the banks which get fees based on the size of the loan. So companies with a cozy banking relationship or requesting millions of dollars are getting priority status.
"So the micro-businesses, the businesses that make up our downtowns and our neighborhoods, those are not necessarily the businesses that were at the front of the line here," Herbert said.
"There's no way that the Lakers, worth over 2, 3 billion dollars got a 20 million dollar loan before I did!" said David Morales, co-owner of San Francisco salon the Beauty Box.
His business has been closed for months, so he asked for thousands -- not millions -- and applied at eight different banks. But because his workers were independent contractors, they didn't count in the loan application and he ended up only getting a bit more than half of the amount he requested.
"The federal government didn't understand that, although we're self-employed, we still created jobs and opportunities for contractors to make a living in our shop. So, I'm worried about them as well," Morales said.
The most dramatic statistic to be drawn from the data released by the Small Business Administration was that -- of the half trillion dollars given out by the government so far -- three quarters of the money was concentrated in just 15 percent of the companies applying for loans.
