Paycheck Protection Program was billed as aid to small businesses. Analysis finds businesses with fewer than 25 employees got just 37% of loans
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Some 142,000 New Jersey businesses shared almost $15.8 billion in federal emergency loans under the nation’s primary coronavirus relief program for businesses.
An NJ Spotlight News analysis of loan approval amounts released by the U.S. Small Business Administration (SBA) on Wednesday in response to a court order found that the loans issued through the Paycheck Protection Program (PPP), which Congress passed last April in response to the COVID-19 pandemic, supported close to 1.38 million jobs reported by recipients. The average award was $111,344 per business, or $11,467 per job, according to the analysis.
While the program was billed as a way to aid small businesses and was very popular — its funding was refreshed, and the deadline extended — more than $8 of every $10 in loans went to just 15% of the companies that got an award and was parceled out in large amounts of $150,000 or more. The smallest companies, those with fewer than 25 workers, got just 37% of the loans distributed. About 100 of the recipients reported employing 500, the maximum permitted for eligibility, while more than 68,000 were freelancers, consultants or single proprietorships or reported just one or two jobs protected.
Three New Jersey businesses with either one or two workers got multimillion-dollar loans. Seventeen qualified for the maximum award of $10 million.
The majority of loans to firms in the state were large ones — exceeding $150,000. Some $12.7 billion that went to almost 22,000 businesses supported more than 981,000 jobs, the analysis showed.
Newark, Edison businesses benefited most
Newark, the state’s largest city, benefited most from the program, with more than 34,000 businesses receiving $407 million. Edison was a close second, with 31,000 firms sharing $393 million.
The largest dollar amounts went to medical offices, $502 million; and lawyers, $436 million; while the largest number of jobs supported were in full-service restaurants, 65,500; and fast-food or limited-service restaurants, 41,000.
Earlier data released by the Small Business Administration did not include exact amounts of awards for individual businesses, only ranges. A number of news organizations sued to get the full records under the Freedom of Information Act, and a federal judge ordered their release earlier this week.
The released data includes only active loans, and not those that were canceled and did not receive any PPP funding. It also does not indicate whether a loan is being forgiven. The loans, made by banks and guaranteed by the SBA, carry a 1% interest rate but can be forgiven if a business meets certain conditions that include keeping staff on the payroll.
There were a number of now well-documented problems with the rollout of the PPP, including an overwhelming number of applicants, computer difficulties and confusion over application requirements. Many banks also appear to have favored their best clients, which made it hard for the average small business to get a loan. A number of large, high-profile companies — including Ruth’s Chris Steak House and the Los Angeles Lakers of the NBA — wound up getting loans but reported returning the money after public outcry.
An analysis by Reveal from The Center for Investigative Reporting last spring of the first round of the program found that New Jersey and New York, the two states hit hardest by the spread of the coronavirus, ranked nearly last in terms of the percentage of all businesses receiving assistance — 18%.
To read this article in the original format, click: Big Share of $15.8B in Federal Emergency Loans Went to Larger NJ Companies