ORANGE COUNTY, Fla. — The $350 billion set aside in the stimulus package was designed to go to small businesses through what was known as the Paycheck Protection program (PPP), however, early data shows most of the money went to the largest small businesses and now the fund is out of money.
“I have not paid the rent, my landlord seems to understand what is going on,” says restaurant owner Evan Dimov.
Dimov owns the Orlando restaurant Too Much Sauce. With only 12 employees, Dimov applied for a loan of under $35,000 to cover the next 10 weeks of payroll.
“I spent hours, when it first opened I stayed late at night just to apply,” says Dimov who did not get the loan before the fund ran out of money.
Now, new data released by the Small Business Administration is showing that the largest small businesses got an outsized share of the money.
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“If you didn’t have a million dollars in payroll costs, you ended up getting the short end of the stick on this one,” says CPA Adam Markowitz. “Over two thirds of the money went to clients, applicants who had loans of at least a half a million dollars.”
Banks, which are issuing these federally-backed loans, will get about $6 billion in fees for the processing for any impacted business with fewer than 500 employees at a single location.
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Now, as Congress debates putting another $310 billion into the program, some members are calling for better guardrails to ensure the money gets to those businesses that need it most and we left behind in the first round.
“It is exacerbating inequities already in access to capital,” said Rep Darren Soto (D FL-09). “We need money set aside for veteran, minority, women owned businesses, family farms, which are also being hurt and for that to flow through our local community banks.”
“Right now, companies that are not being harmed at all by the Coronavirus crisis have the ability to receive taxpayer-funded loans that can be forgiven,” wrote Sen. Rick Scott (R FL) in a statement. “That’s wrong, and it takes money out of the hands of those Americans who really need it. Congress must clarify that PPP loans will only be available to businesses that show a substantial reduction in revenue due to the Coronavirus.”
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