U.S. Virus Bailout: Trump Ties, Investors, Chinese Companies (1)

Companies with ties to President Donald Trump surfaced in a list of virus relief recipients Monday, as did more than 88,000 loans for religious organizations, a number of investment firms and some U.S. units of Chinese companies.

Recipients also included nonprofit groups that advocate against such massive government spending.

Meanwhile, some advocates for small businesses said that a massive release of data from the $669 billion Paycheck Protection Program -- the U.S. government’s largest coronavirus relief operation -- contained too many gaps to allow for evaluating its effectiveness. The data can be found here.

The information on almost 4.9 million loans, released Monday morning on the U.S. Small Business Administration’s website, revealed that big-name law firms and cultural institutions including Carnegie Hall were approved for the program. Several investment firms questioned their inclusion in the data, saying they considered tapping so-called PPP loans, but didn’t.

Here are highlights of initial findings:

*Trump’s Waikiki Partner, Kushner Family Among PPP Borrowers

*U.S. Units of Chinese Companies Got American Bailout Funds

*Firm Linked to Pelosi’s Husband Got Virus Loan, Data Show

*Carnegie Hall, Whitney Museum, S.F. Symphony Got PPP Loans

*Venture Firms Say We Didn’t Seek Bailouts Despite What Data Show

*Fallen Hedge Fund’s Head Among Money Managers Getting PPP Relief

*PPP Millions Went to Firm Identified in Ukraine Laundering Suit

*Kanye West Sneaker Brand Received Millions From Government Loan

*Federal Data Show Where $521 Billion in Small-Business Aid Went

The disclosures, which come after members of Congress and others voiced concern about the level of transparency surrounding the PPP, don’t provide full details for any loans. Names of companies that borrowed less than $150,000 – a group that comprises the vast majority of the program’s borrowers – weren’t made public. And larger borrowers’ loans were disclosed only in broad ranges of values, such as $5 million to $10 million.

The program, passed hurriedly by Congress in March, was designed to provide small firms with loans of as much as $10 million, based on a company’s average monthly payroll before the pandemic. The loans can become grants if borrowers use the proceeds mostly to pay workers -- with some spending allowed for rent and overhead costs. Almost from the beginning, the PPP was dogged by controversy as some publicly traded firms tapped it. Many returned loans after their borrowing drew criticism.

The list of firms that were approved for relief loans features well-known restaurant groups, retailers and law firms such Kasowitz Benson Torres LLP -- which includes one of Trump’s top lawyers, Marc Kasowitz. The firm is listed as receiving between $5 million and $10 million to retain 402 jobs, the data show.

Companies owned by the family of Jared Kushner, the White House senior adviser who is Trump’s son-in-law, also received loans from the program.

Religious Groups

Religious organizations were approved for loans totaling $7.3 billion, according to SBA and the U.S. Treasury Department, which ran the program jointly. The Archdiocese of New York was listed in the data as receiving a loan of between $5 million and $10 million. Civic and social organizations and other nonprofits also received loans, including colleges and universities, museums and the Girl Scouts of the United States of America.

“We are grateful to Congress for this lifeline, if only for a few months, as it not only helped with short- and long-term initiatives tied to our mission, but directly benefits the girls who are living through these unprecedented times,” the Girl Scouts said in a statement.

The Americans for Tax Reform Foundation, a conservative-allied group headed by anti-tax activist Grover Norquist, received a loan of between $150,000 and $350,000. The foundation, which advocates restraint in government spending and says it works to educate taxpayers on “costly government programs,” said in a website posting Monday that the loan meant it has “been able to maintain its employees without laying anyone off.”

Another recipient: The Ayn Rand Institute of Santa Ana, California, which advocates for laissez-faire capitalism, as did its namesake, the author of the philosophical novel Atlas Shrugged.

In a web posting in May, institute officials wrote that they planned to accept federal relief: “For advocates of freedom, individual rights and limited government to turn down these relief funds means choosing to play only the victim’s role in the government’s bizarre game of ‘loot and be looted.’” The group was approved for a loan of between $350,000 and $1 million, supporting 35 jobs, according to the data.

The PPP’s supporters say it has kept tens of millions of workers employed during the pandemic, contributing to the surprising 2.5 million U.S. jobs that were added in May, with an additional 4.8 million jobs in June. The SBA and the Treasury Department said borrowers reported that PPP loans supported 51.1 million jobs, or as much as 84% of all small business employees before the pandemic. Treasury Secretary Steven Mnuchin has said the program supported at least 72% of the small business payroll in all 50 states.

Program Extended

Monday’s release reflects loans totaling almost $521.5 billion, which were approved between the start of the program on April 3 and June 30, when the SBA temporarily stopped accepting new applications. Congress voted last week to extend the program until Aug. 8, and it reopened Monday morning.

Mnuchin had been criticized by transparency advocates for initially refusing to disclose names of companies that received loans, saying the information was proprietary because loan amounts are based on borrowers’ payrolls. The administration relented after demands from lawmakers and agreed to release certain information while withholding other details.

For those loans below $150,000, the agencies are disclosing specific loan amounts along with industry codes, ZIP codes, number of jobs supported and other data -- but no personally identifiable borrower information.

That left “gaping holes and inconsistencies” in the information -- including firms shown as getting loans as little as $1 -- raising questions about how minority-owned businesses and the smallest companies fared, said John Arensmeyer, who heads the Small Business Majority, an advocacy group that chiefly represents firms with fewer than 100 employees.

“The data set makes it next to impossible to determine how well small businesses were served by PPP,” Arensmeyer said in a statement.

Democratic Representative Jim Clyburn of South Carolina, chairman of the Select Subcommittee on the Coronavirus Crisis, said releasing company names for larger firms will create much-needed transparency but is “only a first step” with the identities of most borrowers still withheld.

SBA and Treasury officials said they provided access to the full data to congressional committees that have demanded it. Personally identifiable information in the data shared with Congress will be treated as confidential, according to letters the SBA and Treasury sent to the committees last month.

Public Outcry

Critics wanted to see which larger firms and chains took PPP loans after reports that entities such as Shake Shack Inc. and the Los Angeles Lakers got loans ahead of mom and pop borrowers, prompting those two and others to return their loans. The public outcry spurred the Trump administration to promise to review all loans greater than $2 million and to tell companies that had access to other sources of capital that they likely didn’t qualify.

On Monday, representatives of several venture capital firms that were listed as small-business bailout recipients in the data said they didn’t apply for the program or get any of its funding. In at least one case, a portfolio company for which the firm Andreessen Horowitz is the beneficial owner received between $350,000 and $1 million, according to a spokeswoman for the bank that handled the loan application. Others said they were working with the SBA to try to address what they called errors.

Public companies had returned almost 70 PPP loans totaling $436.5 million as of Monday evening, according to data compiled by FactSquared, but the SBA and Treasury have not disclosed how many loans in all, including from closely-held firms, were repaid. About $38.5 billion in coronavirus relief loans for small businesses were canceled as of the end of May, according to a U.S. Government Accountability Office report, but officials said they will not be reporting details of returned and canceled loans.

News reports on the program have disclosed that members of Congress have taken or benefited from PPP loans, as well as firms that have reported significant revenue, closed facilities or filed for bankruptcy protection after getting assistance. Some small-business owners sued large banks, accusing the lenders of making a priority of large loans for favored customers at the expense of the smallest firms that sought funding.

Limited Data

As part of Monday’s disclosures, federal officials have indicated that they’d release demographic data related to the loans – though officials said the information is limited because it’s based on what lenders asked borrowers to provide voluntarily. The SBA’s inspector general had criticized the agency in a May report for failing to collect standard demographic information on applications for loans that would have allowed it to prioritize loans for businesses owned by minorities, women and veterans, as well as for those in rural areas, as Congress intended.

Trump administration officials have said that by revealing names for the biggest borrowers, Monday’s disclosure accounts for about three-fourths of the total dollar amount in loans approved. But critics say that’s deceptive because almost 87% of all the loans were for amounts less than $150,000. The average loan size was about $107,000, the SBA and Treasury said.

Almost 3.3 million loans, or 67% of the total, were for amounts of $50,000 or less, data released by SBA and Treasury as of June 30 show. They made up 11% of the total amount lent. At the other extreme, more than 4,800 loans were for more than $5 million, accounting for less than 1% of the number of transactions and almost 7% of the amount lent, data show.

Companies in the health care and social assistance industry accounted for the largest amount in loans, at $67.4 billion, followed by professional, scientific and technical services firms at $66.4 billion; construction at $64.6 billion; manufacturing at $54 billion; and accommodation and food services at $42.1 billion, according to the data released.

California, Florida, Texas, New York and Illinois had the largest numbers of loans and the most in dollar amount approved, data show.

There were 5,461 lenders that participated in the program, with large banks that have more than $50 billion in assets accounting for 36% of the dollar amount, and lenders with less than $10 billion approving 44%, according to the data. JPMorgan Chase had the largest amount of net dollars approved at $29.1 billion, or 4.4% of the total, followed by Bank of America at $25.2 billion.

The SBA was overwhelmed by initial demand for the loans, and the initial $349 billion in funding was exhausted in just 13 days. Demand waned after Congress approved a second round of $320 billion, and almost $132 billion remained -- after bank fees and processing costs -- as of June 30, according to SBA and Treasury. Proposals to repurpose the funds for small firms that still need aid are expected to be debated in negotiations for an additional round of stimulus later this month.

(Updates with additional recipients of loans, beginning in first paragraph)

--With assistance from Jason Grotto.

To contact the reporter on this story:
Mark Niquette in Columbus at mniquette@bloomberg.net

To contact the editors responsible for this story:
John Voskuhl at jvoskuhl@bloomberg.net;
Sara Forden at sforden@bloomberg.net