Illustration: Aïda Amer/Axios
The U.S. Treasury Department is leaning against releasing the names of small businesses that received Paycheck Protection Program loans, as first reported by Politico and confirmed by Axios.
Why it matters: Taxpayers bailed out millions of small businesses with hundreds of billions of dollars. But they may never know where the money went — a lack of transparency that could make it harder to know how well the program worked, or if certain applications were fraudulent.
Context: PPP was structured under the SBA's Section 7(a) loan program. Historically, business recipients of Section 7(a) loans have had their names and loan amounts publicly disclosed on an annual basis.
What we're hearing: Treasury Secretary Steven Mnuchin is concerned that disclosing business names and loan amounts could put recipients at a competitive disadvantage, because PPP loans were calculated by payroll.
- For example, one business could possibly discern how much another company pays its employees, via the PPP loan disclosure.
What we're thinking: Mnuchin's concern is valid, but only to a limited point.
- A competitor would need to know how many employees a business has, in order to calculate average compensation. And, if a competitor knows the number of employees, it probably has pretty good insight into compensation.
- PPP calculations were based on backward-looking payroll, has no information on job titles, and doesn't include any salary dollars in excess of $100,000 (i.e., someone making $200k was counted as making $100k).
The bottom line: Congress wants this information for oversight, and there’s nothing in the CARES Act legislation that promises confidentiality to loan applicants or recipients. Given that Mnuchin is publicly talking about a new round of stimulus, it’s hard to imagine that the two sides won’t reach some sort of compromise soon.
Go deeper: How many big companies got PPP loans