The Great Lakes Region administrator of the U.S. Small Business Administration on Friday dismissed criticism that big restaurant chains unfairly grabbed forgivable government loans at the expense of smaller firms in the first round of the Payroll Protection Program loan fund.
“The outliers were few and far between,” Rob Scott said in a conference call with reporters.
Scott estimated only 1% of loan recipients exploited a controversial provision of the law.
“Less than 5% of the loans that were approved were over $1 million and 74% were under $150,000,” Scott said. “That data shows the vast majority of the loans are going to small-business owners.”
President Donald Trump on Friday signed a new relief package worth $484 billion, with $370 billion designated for small businesses as forgivable loans under certain rules that include at least 75% be used for payroll. New applications will start on Monday.
The SBA broadened the number of lenders to include more small lenders and U.S. Treasury-approved community financial institutions that disproportionately loan to tiny female- and minority-headed businesses that claim they were left out of the first round.
Another other relief program emerged for workers Friday.
The Minnesota Department of Employment and Economic Development widened its unemployment assistance to people who are self-employed, independent contractors and others who don’t qualify for regular unemployment benefits. The state, helped by federal funds, is one of the first in the country to assist such workers.
In the initial rollout of the Payroll Protection Program, a provision allowed large restaurants such as Shake Shack, Potbelly and Ruth’s Chris Steakhouse and big public companies to qualify for up to $10 million. The SBA defines a small business to be less than 500 employees. However, the loan program allowed any business or franchisee with less than 500 employees in any one location to qualify for the credit.
Shake Shack returned the money and executives at Potbelly said it plans to return the funds as well. Hospitality lobbyists pushed the exemption that also helped their largest franchisees get cheap capital.
Scott said the SBA will soon release the names of businesses and amounts guaranteed by the government.
The Associated Press found dozens of publicly listed companies collectively received hundreds of millions of dollars of loans from the program’s first round. Some boasted market values over $100 million and executives with compensation exceeding $1 million.