This article was originally published in ProPublica, a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.
This was at least in part an artifact of the republican-lite decision to run aid through local banks. But mostly an SBA that actually hated small businesses.
This is heartbreaking and awful and had the trump administration had a pandemic plan completely unnecessary.
That being said bankruptcy as a criteria for small business loans is not that far fetched an notion
“The SBA’s argument for not allowing Chapter 11 debtors is that the risk of nonpayment is high,” Udell said. “That’s not a factor in whether you were approved. It’s just as high as anyone else, because there’s no other underwriting guidelines.”
The SBA operating under the “welfare reform” mentality: rules applied arbitrarily and incoherently so as to deny funds to “undeserving” small businesses.
As a reminder:
https://www.washingtonpost.com/business/2020/12/01/ppp-sba-data/
Officials from the Treasury Department and the Small Business Administration (SBA) have argued the program primarily benefited smaller businesses because a vast majority of the loans ― more than 87 percent ― were for less than $150,000, as of August. But the new data shows more than half of the $522 billion in the same time frame went to bigger businesses, and only 28 percent of the money was distributed in amounts less than $150,000.
The data released Tuesday disclosed for the first time the exact dollar figures received by some of the top recipients, showing that a number of restaurant chains received the maximum $10 million, among them the parent companies of Uno Pizzeria & Grill, Legal Sea Foods, Boston Market and Cava Mezze Grill. Law firms, churches and professional staffing services were also among recipients of $10 million loans.
But her emails…
So have we gotten the audit report back on the parts that Mnuchin said were his slush fund alone to disburse?
providing PPP loans to debtors in bankruptcy would present an unacceptably high risk of an unauthorized use of funds or non-repayment of unforgiven loans,
Neither the SBA nor any other government agency is monitoring the use of PPP funds, so this argument is a red herring. As for the risk of non-repayment, make the PPP loans nondischargeable in bankruptcy just like student loans.
Aside: I preferred The Mill to The Coffee House, but I wouldn’t use that as the basis for denying The Coffee House a PPP loan.