After a critical small-business loans program ran out of money last Thursday, many people have continued to wonder why the $349 billion depleted so quickly.
The U.S Congress approved the first-come-first-served Paycheck Protection Program (PPP) in March as part of the massive $2.2 trillion CARES Act, which at the time promised to ease some of the financial burden for many of the nation’s smallest business owners in the wave of coronavirus pandemic that has badly affected the economy. But the program ran out of money within weeks.
The SBA announced Thursday that it was “unable to accept new applications for the Paycheck Protection Program based on available appropriations funding.”
The PPP was designed to help the nation’s smallest, mom-and-pop shops keep employees on payroll and prevent mass layoffs across the country amid the coronavirus pandemic.
While more than 1.6 million small businesses have reportedly obtained PPP loans so far, hundreds of thousands of others have seen their applications sit in limbo simply because the programs are out of money.
After weeks of negotiations, a new $484 billion federal aid package was passed in the Senate on Tuesday April 21.
But where did the first approved $349 billion go and why did it deplete so quickly?
Well, a new report shows that hundreds of millions of dollars of the Paycheck Protection Program emergency funding was claimed by large, publicly traded companies.
In fact, the U.S. government allocated at least $243.4 million of the total $349 billion to publicly traded companies, CNBC reported, citing a research by Morgan Stanley.
The research shows that several of the companies that have received aid have market values well in excess of $100 million, including DMC Global ($405 million), Wave Life Sciences ($286 million) and Fiesta Restaurant Group ($189 million). Fiesta, which employs more than 10,000 people, according to its last reported annual number, received a PPP loan of $10 million, Morgan Stanley’s data showed.
At least 75 companies that have received the aid were publicly traded and received a combined $300 million in low-interest, taxpayer-backed loans, according to a separate report published by The Associated Press.
Here is a list of the largest public companies that depleted the first batch of the payroll loans according to CNBC/Morgan Stanley data
“I think you’ve seen some pretty shameful acts by some large companies to take advantage of the system,” said Howard Schultz, former Starbucks chairman and CEO. Instead, the government should act “as a backstop for the banks to give every small business and every independent restaurant a bridge to the vaccine. And that is the money and the resources to make it through.”