PPP Loan Forgiveness Has Been Slow In Coming
Millions of businesses, including small and midsized real estate operations, are still on the hook for the money they received from the Paycheck Protection Program.
Since its inception in March, the PPP has paid $525B in loans to 5.2 million borrowers, mostly small and midsized businesses, to keep paying their workers, which probably saved millions of jobs. Under the CARES Act, borrowers could later apply to have the loans converted into grants, but thus far none of the loans have been forgiven, Politico reports.
Real estate companies reportedly received a share of the money. As of the end of April, when the first round of funding was exhausted, real estate companies had received about $10.7B in loans or roughly 3% of the first-round total of $342B, the Real Deal reported.
The law tasked the Small Business Administration with processing applications for loan forgiveness, but thus far the agency has been sluggish to move on the matter or to provide data to Congress about who has received the funding.
"With only the basic statistics, Congress cannot fully measure the impact of these programs," Rep. Ross Spano (R-Fla.) said during hearings held by the House Committee on Small Business Subcommittee on Investigations, Oversight, and Regulations on Friday. "We need to ensure that loans went to the intended businesses and that the loan proceeds were used properly."
As complaints by borrowers and the financial services companies that processed PPP loans have intensified, pressure has grown on the SBA to start forgiving the loans. In late September, the SBA said that it would.
"The ultimate success of the program will depend on forgiveness, so small-business owners are eager to learn of [Treasury officials’] decisions,” Kevin Kuhlman, senior director of government relations for the National Federation of Independent Business, told The Wall Street Journal.
Allegations of fraud and a lack of transparency have also dogged the PPP and were raised again during hearings in the House of Representatives.
GAO's William Shear telling Congress that SBA and @SBAJovita has been repeatedly unwilling to provide even basic information and materials about PPP and how it was distributed.— Jonathan O'Connell (@OConnellPostbiz) October 1, 2020
“We have serious concerns about data reliability having to do with jobs reported”
"The speed and reduced controls surrounding this lending authority brought with it substantially increased risk," SBA Inspector General Hannibal "Mike" Ware told the House subcommittee. "Our oversight work confirmed SBA did not have adequate controls to address these risks and provide assurance that PPP loans and EIDL grants and loans were only being received by eligible recipients."
So far, according to Ware, at least 57 defendants have been charged with PPP fraud.
In Fort Myers, Florida, a contractor has been charged with PPP fraud. Casey David Crowther allegedly made false statements to the government about what he would do with his $2M PPP loan. Instead of using the money exclusively to pay his workers, Crowther allegedly bought a $689K boat with the funds, according to the U.S. Attorney for the Middle District of Florida.