Winners and Losers: Coronavirus Aid Siphoned Off by Big Banks, Corporations and Trump Allies Leave Small Businesses Out to Dry

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AFP via Getty/Mandel Ngan

More than 45 days have passed since Congress passed $349 million in small-business aid that was intended for Main Street. But by the end of April, it was clear the Trump administration had different plans. Under President Donald Trump, the implementation of the Paycheck Protection Program has incentivized major banks to prioritize large corporations for enormous fees, at the direct expense of small businesses. The program, intended to provide small businesses with the resources they need to weather the coronavirus pandemic, has quickly become a slush fund for big corporations while failing the small businesses it was designed to help.

“We are taking the MOST aggressive action in history to deliver fast relief to your businesses and workers. We will always protect our Small Businesses!” — President Trump, March 20, 2020

“Workers & small businesses need money now in order to survive. Virus wasn’t their fault.” –President Trump, March 27, 2020

Winners: Corporations, which were the first to cash in, leaving scraps for companies that are actually at risk

According to The Washington Post, since the program started on April 3, almost 300 publicly traded companies — many with thousands of employees and market values of more than $100 million — initially sucked more than $1 billion in loans intended for small businesses.

More than 30 corporations with CEOs who made more than $1 million annually received small-business aid or contracts.

Big banks such as JPMorgan Chase & Co. made more than $10 billion worth of fees from servicing small-business loans through the Paycheck Protection Program, which initially received close to $350 billion in the CARES Act in less than a month. These banks made these fees assuming zero risk with these loans, which are guaranteed by the federal government.

At least 12 Trump friends and allies received aid, including:

  1. Ashford Inc. and other hotel companies owned by major Trump donor Monty Bennett, who’s donated a total of $1.1 million to Trump and the Republican Party since 2016, secured $96.1 million in Paycheck Protection Program loans. That’s more than 450 times the average loan of $206,000. After public pressure, Bennett decided to return all of the aid earlier this week.

In fact, a class-action lawsuit alleges that big banks such as Wells Fargo have been actively prioritizing big businesses requesting bailouts — all so they can pad their own balance sheets with huge processing fees. Wells Fargo and the other defendants said they are committed to supporting small businesses and denied any wrongdoing.

Meanwhile, billions of dollars were sent to areas of the country with relatively few novel coronavirus cases, to companies in industries that have not been the hardest hit by the shutdown, as well as to companies that are not even small businesses.

Losers: Actual small businesses, which have been left out to dry

Four in 5 small businesses that applied for an initial Paycheck Protection Program loan did not receive one.

As of April 29, 40 percent of eligible families were still waiting on their direct payments from the CARES Act.

None of the $8 billion set aside for Native American tribes in the CARES Act to help with economic relief has been distributed from Trump and Steven Mnuchin’s Treasury Department to date.

Large majorities of businesses owned by people of color — often underbanked — have been shut out of the application process, something even the Trump administration has acknowledged.

  • One local Queens, New York, restaurant owner filled out loan forms more than 250 times amid website crashes and failed to secure a loan before the Paycheck Protection Program fund ran out of funding.

The chaos around the program’s introduction left genuine small-business owners twisting in the wind trying to figure out how to access the money.

  • Despite promising that businesses would be able to access funds within three days of applying, even if they weren’t approved for a loan, small-business owners have been left waiting a week or more while big businesses cash in.

As a result, within days of the program starting up, small-business owners were reportedly “panicked that the money will run out before their applications are approved” — a worry that proved prescient when funds reportedly ran out after less than two weeks.

Meanwhile, freelancers, sole proprietors, and gig workers are effectively locked out of the program altogether — and, unlike big businesses, the administration doesn’t seem to be making any moves to change the rules to help them out.

The Paycheck Protection Program was supposed to provide a lifeline for the small-business owners who have been hit hardest by the coronavirus pandemic. In fact, the $10 billion worth of service fees that banks made is enough to give 20,000 small businesses a $500,000 loan apiece. Instead, it was just another government bailout for big companies looking to pad their pocketbooks, leaving everyday Americans to pick up the pieces on their own.

Hard-hitting news + analysis paired with action on the issues that matter most. Working alongside @AmProg.

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