WASHINGTON, D.C. – For the millions of small businesses struggling amid the financial impact of the coronavirus pandemic, Congress set aside roughly $350 billion. It did so by including the Paycheck Protection Program (PPP) in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which passed at the end of March.
The U.S. Department of Treasury reports 1.6 million businesses got on average $250,000 in these forgivable loans, through the PPP. However, a survey done by the National Small Business Association (NSBA) shows 52% of small businesses that applied for the loans did not end up getting them.
Part of the reason why so many small businesses may have not received money from the PPP is because some of the money went to larger companies and chains. Some of these larger companies include the steakhouse chain Ruth’s Chris, which got $20 million, or the fast food restaurant chain Shake Shack, which received $10 million.
"It's extremely frustrating that huge corporations are receiving $10 million loans, and smaller businesses didn't get any payout at all,” said Lindsey Dalton, a small business owner in Denver.
Shake Shack announced it is returning the $10 million it got, but on a technicality that money can’t be redistributed to smaller businesses still in need.
“A lot of banks, especially bigger, banks served their existing loan customers first,” said Todd McCracken, who is with the NSBA. “So, a company that had an existing lending relationship or borrowing relationship with the bank is probably a well-established business, probably a little bit larger business on average.”
When Congress created the PPP, it decided to allow banks to distribute the money allotted. This was done in an effort to get that money out faster, through banks, than the government could.
However, banks are now being criticized, some even sued, for possible preferential lending.
“It was to be expected that a lot of this stuff would happen, and I think it is different scenarios at different institutions,” said McCracken.
In an effort to remedy this issue, Congress is now looking to pass another bill with even more funding for small businesses.
“I do think that finding a way to target businesses that were left out in this round, that would be helpful,” McCracken added.
Without additional help, an NSBA survey shows about 48% of all small businesses are not confident about their financial future. It’s important to note, small businesses make up nearly half 44% of the U.S. economy.
