Release of PPP loan recipients' data reveals troubling patterns
Sweeping data released by the Small Business Administration on who benefited from pandemic relief programs raises questions about the equitability and distribution of loans intended for small businesses, an initial analysis by NBC News shows.
The analysis found that tenants paying rent at properties owned by the Trump Organization as well as the Kushner Companies, owned by the family of Jared Kushner, President Donald Trump's son-in-law and senior adviser, benefited financially from the program. These tenants received loans, which they then were required to put toward rent for the loans to be forgiven. The data did not show that the Trump Organization received PPP loans for its properties.
After months of litigation, the SBA released the dataset Tuesday night on every small business that received a Paycheck Protection Program (PPP) or Economic Injury Disaster (EIDL) loan.
The data reveals the most complete accounting to date of the more than $700 billion in forgivable loans Congress and the Trump administration introduced in the spring for allowable expenses, including payroll, rent, utilities and mortgage interest payments.
The analysis by NBC News, one of 11 newsrooms that sued for the release of data, also shows:
Over 25 PPP loans worth more than $3.65 million were given to businesses with addresses at Trump and Kushner real estate properties, paying rent to those owners. Fifteen of the businesses self-reported that they only kept one job, zero jobs or did not report a number at all.
The loans to businesses located at Trump and Kushner properties included a $2,164,543 loan to the Triomphe Restaurant Corp., at the Trump International Hotel & Tower in New York City. The company reported the money didn’t go to keeping any jobs. It later closed.
A company called LB City Inc, which is located at Kushner’s Bungalow Hotel in Long Branch, New Jersey, received a loan for $505,552.50 that it used to keep 155 jobs.
Two tenants at 725 5th Avenue, Trump Tower, received more than $100,000 and kept only three jobs.
Four tenants at the Kushner-owned 666 5th Avenue combined received more than $204,000, and retained only six jobs.
Christopher W Smith, General Counsel with Kushner Companies, denied that the company had benefited improperly in any way from the program.
“The notion that Kushner Companies somehow improperly benefited from CARES Act Paycheck Protection Program (PPP) loans is completely untrue and amounts to nothing more than politically motivated nonsense. Exactly two Kushner Companies’ hotel operations affiliates received PPP loans. Every provision of the PPP program has been comprehensively abided with respect to each of the two loans – and every penny of the funds received from the program was utilized to fund employee payroll and benefits costs to maintain jobs imperiled by the COVID pandemic and associated lockdown measures.”
Kimberly Benza, a spokeswoman with the Trump Organization, wrote in an email, “The Trump Organization was specifically excluded from receiving PPP money, per Senate legislation. In other words, no Trump entity received pandemic-related loans from the government.”
There were also some troubling signs of mismanagement revealed in the data. Over 100 loans were made to companies where no business name was listed, were listed as “no name available” or showed potential data entry errors, such as names that appeared to be dates or phone numbers. More than 300 companies appear to have each gotten more than $10 million in loans through their subsidiaries. Businesses were not supposed to receive more than $10 million per entity, except for those in the food, hospitality or hotels industries.
The findings immediately raised concerns with government accountability groups.
“Many months and broken promises later, the court-ordered release of this crucial data while the Trump administration is one foot out the door is a shameful dereliction of duty and flagrant mismanagement of a program that millions of workers and small businesses needed to get through this pandemic,” Kyle Herrig, president of Accountable.US, an accountability watchdog, said in a statement.
The PPP programs’ original stated intent by officials was to help with payroll for small businesses struggling under the effects of coronavirus lockdown measures. The loans aimed to provide a bridge through the summer for what was hoped to be an improved economic and health climate in the fall.
The law creating the virus bailout program barred businesses controlled by government officials and their family members, including in-laws, from receiving loans. The indirect benefits the Trump and Kushner businesses received were not prohibited by law.
But almost from the start, the programs, particularly PPP, drew criticism for how they were administered and messaged, and whether it was equitable.
Large national banks initially gave loans only to customers with whom they had pre-existing lending relationships. Businesses owned by people of color without strong banking relationships found themselves with limited access and forced them to find other routes for funding. There was also the persistent question of what defined a “small business,” after lobbying by the hotel and restaurant industry ballooned the maximum number of employees allowable to 500, even though over 98 percent of the small businesses in America have fewer than 100 employees.
The administration tried to address the complaints, such as setting aside a day just for smaller community banks to apply for loans. But even that overwhelmed SBA computer systems. These controversies all increased the pressure for transparency.
But in contrast to previous government bailout programs, the agency previously released less detailed versions that it said for privacy reasons omitted the business names and addresses of borrowers who borrowed less than $150,000. And instead of specific loan amounts, loans were listed in ranges.
The SBA defended its handling of the program when it released its data on Tuesday evening.
“SBA’s historically successful Covid relief loan programs have helped millions of small businesses and tens of millions of American workers when they needed it most,” an SBA spokesman said in a statement accompanying the release.
Jim Billimoria, an SBA spokesman, also noted that the missing information was the fault of the lenders. He wrote in an email, “what appears in the data is what was submitted by lenders into the SBA system.”
But as government accountability groups sifted through the data late into the night and uploaded them to publicly searchable databases like SearchPPP.com, they expressed regret about what has happened to so many small businesses partly from the loan program’s “mismanagement” and “malpractice,” said Herrig.
“Only now — after its hand has been forced, hundreds of thousands of small businesses have gone under, and millions of taxpayer dollars were wasted — has this administration pulled back the curtains to reveal the malpractice going on behind the scenes,” Herrig said. “Americans deserved an open, transparent small business aid program when this pandemic started, and any new small business relief program must take a lesson from the abject failures of this one.”
CLARIFICATION (Dec. 2, 2020, 8:45 p.m. ET): An earlier version of this article noted that tenants of the Trump Organization and the Kushner Companies received PPP loans. The Trump and Kushner companies did not themselves receive the loans, and the article has been changed to make that clear. In addition, the earlier version did not include responses from the two companies, which have been added.