The program was designed to help small businesses keep employees on their payroll during the COVID-19 pandemic, but newly released data suggests this wasn’t always achieved.
The U.S. Small Business Administration (SBA) recently released the names of businesses who received loans greater than $150,000 after months of withholding the information.
The ABC-11 I-team analyzed the data for North Carolina companies and uncovered more than 2,100 businesses are listed as retaining no jobs. Another 700 businesses reported no job data.
While retaining jobs was not a requirement to receive a loan, there were strong incentives.
“It could turn into a grant, in other words, you didn’t have to pay it back, if a business used the majority of the money they got to keep their employees,” explained Dr. Michael Walden, a professor at North Carolina State University.
Businesses were eligible to have their loans forgiven if they used 60% of the funds on payroll within 24 weeks, but the data suggests not all businesses have taken advantage of this incentive yet.
The federal data shows ten businesses received at least $5 million but retained zero jobs. In total, at least nearly $700 million was given to North Carolina business who kept no jobs, according to the SBA data.
However, the ABC-11 I-team found the data is riddled with inaccuracies.
The Food Bank of Central and Eastern North Carolina qualified for at least $1 million from the program, funding the business has used to increase operations.
“Our whole operation changed. We were spending in about four weeks, the entirety of our annual budget for food purchases because of the food supply issues so again it was just another piece of really not knowing what this long-term recovery, this long-term support of the community was going to require in terms of funds,” said the Food Bank’s communication director Jessica Whichard. “This loan really puts us in place of security and knowing that we’re going to be here in the long haul for people.”
Whichard said the company has retained 114 employees, but the federal data shows it has kept zero.
“We’re working with our financial institution on this loan in particular, and we just know the paperwork hasn’t been finalized yet and that’s the reason for the zero. When we put forth the application, we put our entire team in there and that’s 114 people and that’s who we’re working to retain so we can serve the community,” she said.
Multiple other businesses ABC-11 reached out to reported similar errors, some having no idea where that data entry came from.
Thomas Stith, the SBA N.C. District director explained the data is preliminary and is a ‘living and breathing document.’ He also said the data will continue to change as the program accepts more businesses.
“Certainly with any task, with this significant of a response, you may have some challenges to ensure that you address those specific data points but I feel comfortable as we move forward and complete the program,” Stith said. “It’s an ongoing process and, again, when companies reach that forgiveness clause I think that will provide us with additional data to include to get an accurate picture of the impact of PPP.”
Inaccuracies in the data isn’t the first criticism the program has received.
Businesses tied to President Trump, major corporations and Kayne West’s fashion company were just some of the initial discrepancies found.
Walden also pointed to numerous businesses getting left out because they didn’t have relationship with banks handling the loans, and bank choosing bigger companies.
“These are problems we expected, some type of problem because the federal government wanted to do this so quickly, want to get the money in there because they were fearful that his contraction of the economy, which has been huge, would wipe out a lot of business and we didn’t want that to happen,” Walden said.
A program to this scale, involving more than $500 billion has never occurred before, so while there are some problems, Walden said he thinks the program was effective.
“Every plan has its flaws and certainly because this was done so, so rapidly you might expect there to be some kinks in it too,” he said.
Stith agreed that so far the program has been effective, especially with the assistance the program provided in North Carolina.
“I think there has been significant help and support for our small business community and employing our neighbor, our family and friends, over 20,000 businesses participating, so we feel comfortable as we continue to gather data those types of issues can be addressed,” Stith said.
The SBA is still reviewing applications for an additional $130 billion until August 8. For more information, click here.
Copyright © 2020 WTVD-TV. All Rights Reserved.