Apr 14, 2020 - Economy

Questions still loom over Paycheck Protection Program

Illustration of a hand holding a tiny dollar bill

Illustration: Sarah Grillo/Axios

Over 70% of the federal government's $349 billion small business bailout program is already spoken for, as Democrats and Republicans continue to squabble over an expansion that both sides believe is necessary.

The state of play: There is still a lot we don't know about how the existing program is operating, and possibly won't until the next pot of money is emptied.

The big question: Will there be a public database of PPP loans, which could help provide insights on efficacy and checks on fraud?

  • The Small Business Administration does typically disclose granular data for the category of loans under which PPP falls — including the number of jobs supported.
  • But the databases are static spreadsheets, not dynamic or easily searchable, and only updated annually. If that method is continued, we wouldn't learn about PPP recipients until early 2021.
  • Axios repeatedly asked SBA officials if a PPP-specific database will be forthcoming (and when), but didn't receive a direct answer.

Plus, it also could be helpful to know details of denied applications, as well as lender-approved ones that later lose SBA guarantees. Such sunlight could discourage bad actors who divert lender attention away from legitimate applicants, not to mention expose flaws whereby applicants are unfairly denied.

  • For example, there is widespread talk of venture capital and private equity fund managers applying for PPP loans, even though management fee cashflows should not have been negatively impacted by the coronavirus.

We also don't know how much money is actually out the door.

  • The SBA this morning disclosed that over 1 million applications have been approved, totaling over $247 billion from more than 4,600 lenders.
  • Crickets when it comes to how much of that $247 billion is actually in small business bank accounts, thus helping to forestall layoffs and missed financial obligations like paying utility bills. Lenders have 10 calendar days to fund from the date of loan approval, but it's unclear if things are moving faster or slower (let alone how specific lenders are performing).

The bottom line: The speed of this massive program, from conception to execution, has been lightning quick. Data disclosure, however, isn't keeping pace.

Go deeper: America's small business bailout is off to a bad start

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