SBA defends PPP loans to restaurant chains, billionaire-backed businesses as 'exceptions'
PPP loan winners including Kanye West’s shoe company, Five Guys are ‘exceptions’: SBA administrator
U.S. Small Business Administrator Jovita Carranza provides insight into the latest on the Paycheck Protection Program.
A deluge of data released this week by the Trump administration showed that restaurant chains, billionaire-backed businesses and private schools that cater to elite clientele were among the millions of firms that received taxpayer-funded aid through the Paycheck Protection Program.
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But on Thursday, Small Business Administration Administrator Jovita Carranza defended the multimillion-dollar loans to the wealthy and well-connected companies.
"Those are the exceptions," Carranza told FOX Business, noting there are review systems in place to ensure that businesses that received loans used the funds as legally required for it to be forgiven.
TRUMP ADMIN RELEASES NAMES OF ALMOST 700,000 PPP BORROWERS
The data, released on Monday, shows that some $521 billion in taxpayer-funded aid went to more than 4.9 million small businesses, propping up 51 million jobs in the midst of the virus-induced recession. Loans worth more than $1 million represented just a sliver — less than 2 percent — of the distributed aid. Less than 0.1 percent of loans were for more than $5 million, the data shows. More than 86 percent of those loans were for less than $150,000.
By and large, the rescue program — designed to keep small businesses afloat and avert mass layoffs – is open to any business with fewer than 500 employees per location, whether it’s owned by a billionaire or not. So long as 60 percent of the money goes toward maintaining payroll, the federal government will forgive it, essentially turning the loan into a grant.
COMPANIES RETURNED $30B IN VIRUS RELIEF LOANS FROM PPP
At its onset, the program drew criticism for granting multimillion-dollar loans to large, public companies. But the Trump administration scrambled to close the loopholes that had allowed them to tap the fund, including pledging to audit any loan worth more than $2 million. The government also required that companies make a “required certification in good faith” that the PPP loan request is necessary.
"We have systems in place so that if anyone is misrepresenting the need for those funds, we will act accordingly," Carranza said.
Companies have also returned or canceled at least $30 billion in loans, Carranza said. The aid program reopened to applicants on Monday, with close to $132 billion remaining in the fund.
PPP REOPENS TO APPLICANTS WITH $132 BILLION REMAINING
"I'm very hopeful that other people [will] perhaps consider those loans and make other arrangements with their lenders," Carranza said. "Perhaps they're not going to ask for forgiveness, because as you know, no federal dollars will go to a business that is not appropriate for this particular plan."
The data revealed that other large companies applied for, received and kept multimillion-dollar loans, including restaurant groups Five Guys, P.F. Chang's and TGI Friday's, which all received aid worth somewhere between $5 million and $10 million.
LUXURY RESTAURANT CHAIN BACKED BY ROBERT DE NIRO RECEIVED OVER A DOZEN PPP LOANS
A chain of luxury restaurants and boutique hotels co-owned by actor Robert De Niro — who's worth an estimated $500 million — received at least 14 loans, making it one of the biggest beneficiaries of the program.
Kanye West’s clothing and sneaker brand, Yeezy, received a loan worth somewhere between $2 million and $5 million. The money helped the company save 106 jobs, according to the federal data.
West is worth an estimated $1.3 billion, according to Forbes.
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