‘They made a mistake.’ Florida Democratic Party will return PPP loan, blames SBA

Florida Democratic Party leaders say they will return a forgivable $780,000 federal loan after facing internal criticism for applying for relief from a federal program created to help small businesses keep employees on the payroll during the coronavirus-driven recession.

The party explained the decision in an emailed statement at 12:12 a.m. Thursday. A spokeswoman blamed the Small Business Administration for granting the loan, one of thousands disbursed as part of the Paycheck Protection Program, or PPP, in the roughly $2 trillion CARES Act coronavirus relief package.

“Congress passed the Paycheck Protection Plan to support employers and their efforts to provide funds to keep people working — and like many employers during the shutdown, FDP was concerned about meeting payroll and keeping our staff employed, so we applied,” party spokeswoman Luisana Pérez Fernández wrote in the statement. “The bank, the loan processor and agents of the Small Business Association approved the funding. It now seems they made a mistake in approving the funding so we are volunteering to return it.”

Calls for the party to return the money began after the federal government released information this week detailing grants worth $150,000 or more. The list showed the Florida Democratic Party Building Fund, Inc. accepted between $350,000 and $1 million. The money, approved in mid-April, saved 100 jobs, according to the SBA. The lender was listed as Newtek Small Business Finance.

State records show the party formed the not-for-profit corporation in April of last year as en entity to construct, own or operate “the headquarters of the state executive committee of the Florida Democratic Party and related political organizations.” Information released by the Small Business Administration classified the loan under a code used for public relations agencies.

In newly published filings with the Federal Election Commission, the Democratic Executive Committee of Florida political committee listed five contributions from “CARES,” using the address of the Small Business Administration headquarters, between April 24 and April 28 worth a combined $815,641.57.

Pérez Fernández said the value of the loan to be returned is $780,000. She said the party did not seek or receive any smaller loans that would not have been disclosed this week by the Small Business Administration. She could not say what jobs were performed by any employees whose paychecks were subsidized by the PPP funds, and would not explain why the party believes the SBA made a “mistake.”

Several Democratic lawmakers began criticizing the state party Wednesday and called on it to return the PPP money, concerned that dipping into a fund meant to help small businesses could leave the party and its members open to criticism as campaigns for state and federal offices approach election dates.

The party works closely in Florida with Democratic candidates, including presumptive Democratic presidential nominee Joe Biden. Florida Democratic Executive Director Juan Peñalosa, among the corporate managers of the building fund listed as the loan recipient, was announced this week as a senior adviser to Biden’s campaign in Florida, a key battleground state.

Florida Sen. Jason Pizzo, D-North Miami Beach, noted that the party has “avenues to fundraise that a small biz doesn’t.” He tweeted: “While legal &/or ethical concerns should give pause to seek/accept PPP, they should promptly return the $$, and refrain from partisan slights which only serve to impugn the integrity of one’s party. #afewFLDems.”

“Agreed,” responded state Rep. Ana Eskamani, an Orlando-area Democrat. ”PPP was created for small businesses & nonprofits desperate for support during COVID19, not for political parties.”

The program was established at the onset of the pandemic by Florida Republican Sen. Marco Rubio, and was designed with fewer requirements for businesses to receive money so the loans could be distributed as quickly as possible. Businesses with fewer than 500 employees or hotels and restaurants with fewer than 500 employees per location were eligible. PPP loans that are used to keep workers on payroll and pay for other essential expenses like rent do not have to be paid back, essentially turning the money into a grant.

Data released by the SBA on Monday credited the program — which has billions in funds remaining and will run through early August — with saving 3.2 million Florida jobs.

At the onset of the program, many business owners reported issues with getting their loans processed. In April and May, the Florida Democratic Party criticized the program — despite being approved for a loan on April 15.

“Trump’s failed implementation of the Paycheck Protection Program (PPP) has left millions of small businesses still waiting for a desperately needed lifeline,” the party said in a May 21 news release. “Nearly a month into the PPP, only 7 percent of small businesses had received funds, and nearly half of Black and Latino small business owners say they anticipate closing permanently within six months.”

Some Democrats have questioned whether the party was legally allowed to receive PPP funding, as traditional SBA loans are not available to political parties. On Thursday, state Sen. Joe Gruters, chairman of the Republican Party of Florida, said “the PPP eligibility language is very clear — that political organizations are not eligible for PPP loans.”

“It is embarrassing that after all of their hypocritical cheap shots at the Paycheck Protection Program they got caught with their hands in the cookie jar,” said Trump Victory spokeswoman Emma Vaughn.

Paycheck Protection Program rules posted April 15 on the online federal register state that businesses identified by the Small Business Administration as being generally ineligible for loans from the agency would also be considered ineligible for PPP loans. Some of those regulations have been challenged or modified. But the SBA regulations that prohibit businesses primarily engaged in political or lobbying activity” from receiving loans through the agency were upheld April 21 by a federal judge in Washington, D.C., after the American Association of Political Consultants sued to overturn the restrictions under the federal rule.

Still, the Florida Democratic Party is not the only political entity to have received a PPP loan. The Black Republican Caucus of Florida received between $150,000 and $350,000, as did the Ohio Democratic Party. Businesses tied to politicians, including car dealerships owned by Republican U.S. Rep. Vern Buchanan and a publicly traded company that employs the husband of Democratic U.S. Rep. Debbie Mucarsel-Powell, also received loans. (Mucarsel-Powell criticized the company, and Fiesta announced it would return the money.)

Pérez Fernández said in her statement that the party is looking forward toward the coming election after deciding to return the PPP money.

“As a Democratic Party, we are entering this election stronger than ever, with a growing staff and a commitment to electing a president that will address this crisis, rebuild our economy and heal the nation,” Pérez Fernández said in her statement. “That president is Joe Biden.”