PROVIDENCE, R.I. (WPRI) — One week after the U.S. Small Business Administration resumed taking applications for the Paycheck Protection Program, the agency says $550 million worth of loans to 6,822 Rhode Island businesses have been approved.
That’s on top of $1.3 billion in loans approved for 7,732 Rhode Island businesses in early April before the program’s first round of funding ran out.
The still-unanswered question: which businesses got the cash?
The program, passed by Congress as part of the CARES Act in late March, provides loans to small businesses so they can keep employees on their payrolls during the pandemic, requiring that 75% of the loan be used for payroll in order to get the loan forgiven. The other 25% can be used for ongoing business expenses such as rent or other bills.
But the SBA has refused to release a list of which businesses are getting approved, only putting out aggregate totals for each state. The vast majority of Rhode Island businesses are considered small businesses by the SBA, which defines the category as enterprises with up to 500 employees.
Rhode Island U.S. Sen. Jack Reed sent a letter to the SBA last week requesting a list of businesses and nonprofits that have received the loans, along with the banks that loaned the money.
“My office has heard from many small businesses across Rhode Island that did their part by getting their paperwork in order and applying for PPP loans in a timely manner, but were still shut out from the first round of PPP funding,” Reed, a Democrat, wrote in the letter.
“It is now apparent that lenders have been prioritizing the applications of well-connected and larger clients, while downgrading the applications of smaller businesses without pre-existing lending relationships,” he wrote. “This is clearly not how Congress intended the PPP loan program to work.”
Reed is now calling for a congressional investigation and audit into how the program is being administered.
The first round of PPP loans ran out in mid-April, after 1.6 million businesses nationwide were loaned roughly $350 billion. The program was criticized for appearing to loan money to larger businesses over smaller ones in the the first round: the average loan size was $206,000, and 67,000 businesses received more than $1 million.
In the second round of funding — which started April 27 after the program was replenished by Congress — the average loan size went down to $79,000, “yet another indicator that the program is broadly based and assisting the smallest of small businesses,” Treasury Secretary Steven Mnuchin said in a press release.
More than 70% of the individual loans in the second round were for less than $50,000, according to the SBA’s data.
Mark Hayward, the Rhode Island district director for the SBA, has previously said he doesn’t have access to the list of businesses that have received the loans. Asked again Monday morning, he replied with the link to the SBA’s aggregate data that lists the $550 million allocated to Rhode Island in the second round.
The SBA says it has also issued Economic Injury Disaster Loans to 223 Rhode Island businesses, and 4,292 have received the EIDL advance, which provides up to $10,000 to businesses (depending on the number of employees) which does not need to be paid back.
In Massachusetts, 95,705 businesses have been approved for more than $15 billion worth of PPP loans through both rounds of funding, according to the SBA.
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