Following up on a story we looked at last week, it appears that the problem of the Small Business Administration (SBA) accepting applications to have Paycheck Protection Program (PPP) loans forgiven but not acting on any applications is getting worse.
It was originally reported that the SBA had recieved 64,000 applications without acting on any of them, but that report was based on information dated to September 8th.
Citing the most recent data available, Politico reported on Friday that almost 100,000 applications had piled up as of last week with no action taken on any of them.
Banks, which loaned their own money with the expectation that it would be repaid by the government, have been submitting applications for loan forgiveness to the SBA since Aug. 10. But the lenders say the agency has been silent on whether any of the applications will be accepted. The SBA said Thursday it has received 96,000 forgiveness applications — representing fewer than 2 percent of the total loans — but has not approved or denied any of them.
“No bank I know anywhere in the country has received any money from the SBA," said Brad Bolton, president and CEO of Community Spirit Bank in Alabama.
At this rate, one wonders if the Trump regime will act on anything more than a small percentage of applications before Christmas. And this is a lot of money we're talking about.
Not all of the more than $650 billion appropriated for PPP loans by Congress was claimed, but over $500 billion of it was and that's now a $500 billion void where no one really knows what's going to happen next. A majority of applicants will theoretically have their loans forgiven and converted into grants, but how long is that going to take and how many won't because of some technicality or regulatory glitch installed by the Trump regime? How many will have their loans forgiven when they shouldn't have while someone else who should won't?
This will almost certainly require congressional action at some point and I think we should be prepared to see a Democratic Congress with no good options left for them. That may be the case with many things over the next few years in the aftermath of Trump. Democrats are going to have to make hard choices and they will face criticism for it, but Trump has broken everything.
Automatic forgiveness for some loans may be necessary simply because the Trump regime's implementation of the program made anything else logistically impossible.
In related news, the Washington Post reports that some companies that received PPP loans proceeded to buy back their own stocks and make dividend payments to shareholders.
The findings reinforce long-standing concerns that the Paycheck Protection Program, an emergency stimulus fund offering low-interest, forgivable loans to businesses with fewer than 500 employees, was accessed by financially healthy companies that could have gone without a bailout.
Under the Small Business Administration rules, a PPP loan could be used only to meet payroll and pay mortgage interest, leases or utility bills. PPP loan recipients weren’t prohibited from paying investors with other funds, as long as the PPP funds were kept separate.
Still, some advocacy groups believe companies that had enough cash on hand to pay millions in dividends and stock purchases were unlikely to qualify for the PPP program, which was designed to assist troubled companies in keeping employees on the payroll during weeks when they were unable to do business because of pandemic-related lockdowns.
There's what's legal and what's ethical. This is not the latter.