Should the Small Business Administration Make Information About its COVID-19 Relief Measures Public? (H.R. 6782)
Do you support or oppose this bill?
What is H.R. 6782?
(Updated July 1, 2020)
(5/28/20 NOTE: This bill was rejected by the House on a 269-147 vote under suspension of the rules, which require a 2/3 majority for passage.) This bill — the TRUTH Act — would require the Small Business Administration (SBA) to make information regarding economic relief measures implemented in response to COVID-19 publicly available, including loans made under the Economic Injury Disaster Loan Program (EIDL) and the newly-created Paycheck Protection Program (PPP) that exceed $2 million.
Specifically, this bill would require the SBA to publish the following information on the PPP, EIDL, and other emergency grants:
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The identities of each recipient of assistance and an explanation of the decision-making process that led to their receipt of assistance;
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Each assistance recipient’s number of employees;
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The date on which assistance was disbursed to each recipient;
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The lender or intermediary through which assistance was distributed to each recipient; and
- The amount of assistance disbursed to small businesses owned and controlled by socially and economically disadvantaged individuals, women, and veterans.
This legislation’s full title is the Small Business Transparency and Reporting for the Underbanked and Taxpayers at Home (TRUTH) Act.
Argument in favor
The federal government’s massive spending on COVID-19 relief measures demands transparency so that taxpayers know how their money is being spent. Requiring the Small Business Administration (SBA) to make federal COVID-19 assistance recipients’ information public is needed to ensure accountability.
Argument opposed
With only 3,200 employees and an $819 million budget, the Small Business Administration (SBA) is too small to handle the enormous workload that this legislation would force upon its employees. It could also deter otherwise deserving small businesses from participating in programs aimed at helping them weather the pandemic-induced lockdowns.
Impact
Businesses that have received federal COVID-19 relief; PPP; Economic Injury Disaster Loan Program (EIDL); and the Small Business Administration (SBA).
Cost of H.R. 6782
A CBO cost estimate is unavailable.
Additional Info
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.
Media:
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Sponsoring Rep. Dean Phillips (D-MN) Press Release
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Sponsoring Rep. Dean Phillips (D-MN) Press Release
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POLITICO (Context)
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Countable - CARES Act (Context)
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Countable - How to Apply for PPP Loans (Context)
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Countable (PPP Tranche 1 Data)
Summary by Lorelei Yang and Eric Revell
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