Size mattered: Big companies got coronavirus loans first
NEW YORK (AP) — Ever since the U.S. government launched its emergency lending program for small businesses on April 3, there have been complaints that bigger companies had their loans approved and disbursed more quickly.
There is now evidence to back up those complaints.
An Associated Press analysis of Small Business Administration's $659 billion Paycheck Protection Program shows that nearly a third of the loans approved in the program’s first week ranged from $150,000 to $10 million, the maximum allowed. In a second round of funding that began April 27, such loans made up just 7.4% of the total.
The average loan size fell from $257,240 on April 10 to nearly $105,000 as of July 17, according to the SBA.
The PPP made very low-interest loans available to any business -- or any franchisee of a business -- with under 500 employees. The loans would be forgiven if most of the money was used to keep employees on payroll.
Larger companies with connections to major national or regional banks got priority treatment in the program’s initial phase, the data show, while many smaller businesses said they were turned away because the banks required them to have a checking account, a credit card and a previous loan to be considered.
Some small businesses submitted an application but then heard nothing. Small restaurants, retailers and other companies most in need were left waiting and unable to pay their employees, landlords or vendors. Many learned not from their bank but via news reports that the initial $349 billion in funding had run out in less than two weeks.
“The program was structured to take advantage of existing banking relationships that favored established businesses,” said John Arensmeyer, the CEO of the advocacy group Small Business Majority. “It was not...
