Where did federal emergency business loans go
Some 142,000 New Jersey businesses have shared nearly $ 15.8 billion in federal emergency loans under the nation’s primary coronavirus business assistance program.
An NJ Spotlight News analysis of loan approval amounts released by the U.S. Small Business Administration (SBA) on Wednesday in response to a court order found that loans issued under the Check Protection Program of payroll (PPP), which Congress passed last April in response to the COVID-19 pandemic, has supported nearly 1.38 million jobs reported by recipients. The average price was $ 111,344 per business, or $ 11,467 per job, according to the analysis.
While the program was touted as a way to help small businesses and was very popular – its funding was renewed and the deadline extended – over $ 8 out of $ 10 in loans went to just 15% of the loans. companies that were awarded a prize and were awarded. in large amounts of $ 150,000 or more. The smallest companies, those with less than 25 employees, obtained only 37% of the loans distributed. About 100 of the beneficiaries reported employing 500, the maximum allowed for eligibility, while more than 68,000 were freelancers, consultants or sole proprietors or reported only one or two sheltered jobs.
Three New Jersey companies with one or two workers got multi-million dollar loans. Seventeen qualified for the maximum award of $ 10 million.
The majority of government business loans were large amounts, in excess of $ 150,000. Some $ 12.7 billion that went to nearly 22,000 businesses supported more than 981,000 jobs, according to the analysis.
Newark and Edison companies benefited the most
Newark, the state’s largest city, benefited the most from the program, with more than 34,000 businesses receiving $ 407 million. Edison followed closely behind, with 31,000 companies sharing $ 393 million.
The largest amounts went to medical offices, $ 502 million; and lawyers, $ 436 million; while the greatest number of jobs supported were in full-service restaurants, 65,500; and fast food and limited service restaurants, 41,000.
Earlier data released by the Small Business Administration did not include exact reward amounts for individual businesses, only ranges. A number of news agencies have taken legal action to get the files complete under the Freedom of Information Act, and a federal judge ordered their release earlier this week.
The published data includes only active loans, not those that have been canceled and have not received any PPP funding. It also does not indicate whether a loan is canceled. Loans, made by banks and guaranteed by the SBA, carry an interest rate of 1% but can be canceled if a business meets certain conditions, including keeping staff on the payroll.
There were a number of now well documented issues with deployment of the PPP, including an overwhelming number of applicants, IT difficulties and confusion over application requirements. Many banks also seem to have favored their best customers, making it difficult for the average small business to get a loan. A number of big, prominent companies – including Ruth’s Chris Steak House and the NBA’s Los Angeles Lakers – ended up getting loans but said they paid back the money after the outcry.
A Reveal analysis from the Center for Investigative Reporting last spring of the program’s first round found New Jersey and New York, the two states hardest hit by the spread of the coronavirus, ranked near bottom. in terms of percentage of all enterprises receiving aid – 18%.