The small businesses getting bailout loans aren’t what you think
You might think of a small business as your local florist, barbershop, delicatessen or clothing boutique. But the government’s massive list of “small businesses” that received stimulus loans through the Paycheck Protection Program includes many large and prosperous firms that aren’t necessarily the fragile businesses the bailout program was meant to protect.
The largest group of businesses receiving sizable loans isn’t surprising: 33,608 full-service restaurants have received federal loans of $150,000 or more, according to Yahoo Finance analysis of data the Small Business Administration released July 6. But many people might not guess the second- or third-largest groups of loan recipients. Nearly 21,000 medical practices got large PPP loans, along with 14,310 law firms. At least 167 medical practices got loans ranging from $5 million to $10 million, the largest loans available. And at least 128 law firms got the largest loans.
Several prosperous firms run by politically connected insiders have received government loans, generating concerns about abuse of the program. At least five law firms where partners average a minimum of $1.2 million in annual pay got loans of $5 million or more, including firms run by prominent litigators David Boies and Marc Kasowitz, according to the Wall Street Journal. A company linked with Brad Parscale, President Trump’s reelection campaign manager, got a loan, along with companies associated with several other Trump friends. And loans went to companies owned by at least 7 members of Congress or their spouses, including one partially owned by House Speaker Nancy Pelosi’s husband, Paul.
Other loans went to well-financed companies Congress almost certainly wouldn’t bail out on their own. Restaurant chains PF Chang and Silver Diner, both owned by private-equity firms, got loans of at least $5 million. Kanye West’s Yeezy clothing brand got a loan of at least $2 million. The program is supposed to help small businesses with fewer than 500 workers unable to get traditional financing amid the uncertainty of the coronavirus recession. The loans become grants for companies that can demonstrate they used the money to keep workers on staff at their normal pay.
Overall, the SBA says 4.9 million U.S. businesses have received PPP loans totaling $521 billion. The average loan size is $107,000. About 661,000 firms got loans of more than $150,000. The government identified all of those companies by name. It did not identify the other 4.24 million firms that got smaller loans, but it did provide data on what types of firms they are.