In-Depth: Sponsoring Rep. Dean Phillips (D-MN) introduced this bill to require the Small Business Administration (SBA) to make information regarding economic relief measures implemented in response to COVID-19 publicly available:
“The CARES Act was the largest distribution of taxpayer dollars in our nation’s history, and Americans deserve to know where their money is going. While we’ve managed to help millions of small businesses keep their lights on, millions more remain on the outside looking in. It won’t matter how much money we appropriate if the system by which it’s distributed is inaccessible to those who need it the most. As an entrepreneur and small business owner myself, I will be relentless in the pursuit of transparency and reforms necessary to ensure these programs work for all who need them to survive.”
The SBA explains its lack of transparency regarding loan recipients’ information by arguing that it is currently too consumed with the urgent effort ot helping small businesses through the economic downturn; at present, the SBA says that specific loan data may be released “in the near future.” In a statement, the agency said:
“At this time, the agency is focusing its efforts on assisting small businesses during this unprecedented disruption to the economy. The agency recognizes the need to balance the interests of transparency with the privacy and confidentiality issues release of loan information raises."
This legislation has 19 House cosponsors, including 18 Democrats and one Republican.
Of Note: The Paycheck Protection Program was created with the enactment of the “phase 3” CARES Act, which provided $350 billion in funding for forgivable small business loans under the PPP. Due to high demand, the initial tranche of funding was exhausted after 13 days of operation on April 16th, which aided 1.661 million small businesses and saw an average loan size of $206,000 according to SBA data tabulated by USAFacts.
Senate Republicans attempted to increase funding for the PPP a week before the initial tranche of funding was exhausted, but Democrats blocked that legislation. On April 20th, the Senate reached a compromise on a “phase 3.5” relief bill, the Paycheck Protection Program & Health Care Enhancement Act, which provided $321 billion in additional PPP funding along with funding for other SBA small business aid programs, healthcare provider reimbursement amid the coronavirus pandemic, and coronavirus testing & tracing capacity. This is the largest-ever expenditure of American taxpayer money.
However, to date, the SBA has yet to provide full transparency over its administration of the PPP and Economic Injury Disaster Loan Program (EIDL); this has led many to question the distribution of millions of dollars to well-financed organizations such as Shake Shack, the L.A. Lakers, and Ruth’s Chris Steak House. These organizations respectively received $10 million, $4.6 million, and $20 million, all of which they have returned after coming under public scrutiny for receiving these funds.
As of Friday, May 22, the SBA had processed 4.4 million loans, totaling about $512 billion in awards of the total $671 billion in funding allocated.
Summary by Lorelei Yang and Eric Revell(Photo Credit: iStockphoto.com / spxChrome)