Peters seeks probe of federal small business loan effort
U.S. Sen. Gary Peters is calling on federal officials to investigate how funds are distributed through a small-business loan program aimed at helping lessen the impact of the COVID-19 crisis amid concerns the funding isn't going to enough businesses in need.
In a letter Tuesday to the U.S. Government Accountability Office, the Bloomfield Township Democrat discussed issues with the the U.S. Small Business Administration's Paycheck Protection Program, part of the $2 trillion Coronavirus Aid, Relief and Economic Security Act signed into law March 27.
“As small businesses in Michigan and across the country continue to face dire financial challenges, I am concerned that PPP loans may not have gone to those who need them most,” Peters wrote.
“Over 1 million Michigan residents, many of whom worked for small businesses, have filed for unemployment in the past month alone — the fourth highest in the nation. However, Michigan currently ranks 35th out of 50 states for processed PPP loans. There is also evidence that a substantial amount of PPP loans have gone to large hotel and restaurant chains, rather than the struggling small and minority-owned businesses who may be forced to permanently close their doors without urgent assistance," he contends.
The Paycheck Protection Program was designed to help small and medium-sized businesses cover operational costs during the coronavirus pandemic.
It makes low-interest loans available, via SBA lenders, to businesses with 500 or fewer employees.
In his letter, Peters noted the CARES Act directs the Government Accountability Office to conduct oversight of COVID-19 funds and response efforts, including bimonthly reports and monthly briefings to Congress. The first report is due within 90 days of the legislation’s enactment, he said.
“As part of this ongoing oversight, I ask that you review the PPP, including funds provided under the CARES Act and any subsequent legislation,” the ranking member of the Senate Homeland Security and Governmental Affairs Committee wrote.
The senator asked that the GAO examine the policies used to determine how the loans were issued, the geographic distribution of recipients and loans, and an analysis of the size of businesses receiving loans from the economic relief package.
His letter came the same day a $483 billion coronavirus aid package sailed through the Senate after Congress and the White House reached a deal to replenish the small-business payroll fund and provided new money for hospitals and testing.
The $310 billion for the Paycheck Protection Program includes $60 billion or so set aside for – and divided equally among – smaller banks and community lenders that seek to focus on underbanked neighborhoods and rural areas. Democrats have highlighted the number of smaller and minority-owned shops missing out on the aid.
Another $60 billion would be available for a small-business loans and grants program delivered through an existing small business disaster aid program, $10 billion of which would come in the form of direct grants.
The Paycheck Protection Program has been swamped by businesses applying for loans and reached its $349 billion appropriations limit last Thursday after approving nearly 1.7 million loans. That left thousands of small businesses in limbo as they sought help.
Meanwhile, an Associated Press investigation has found that companies with thousands of employees, past penalties from government investigations and risks of financial failure even before the coronavirus walloped the economy were among those receiving millions of dollars from the relief fund.
President Donald Trump said he would ask larger companies to return money they accessed from the federal stimulus package because it was intended to help small businesses, Bloomberg News reported.