Members of Congress and Private-equity Backed Chains Took Small Business Loans


100s of Billions in relief went large restuarant chains and businesses owned by members of congress or their families.

The Small Business Administration reported Monday that its $660 billion of small business relief went to private-equity backed chains and businesses owned by members of Congress, according to The Washington Post.

Data released by the SBA also showed that about 90,000 firms receiving the money have not promised to recall employees or create jobs. 48,922 recipients reported zero as the number of jobs they would retain, and 40,506 simply left it blank. 10 other firms reported receiving between $5 million and $10 million to retain only one job.

Businesses need to certify that the money they applied “was necessary to support the ongoing operations,” according to the SBA’s website. The private-equity backed chains, including PF Chang’s and Silver Diner, took the loans and raised questions about whether such large companies should accept the money or not. One senior administration official commented on it, saying, “We think we’ve done a reasonably good job of suggesting that those who were not going to be able to meet the certification should have returned money.”

Members of Congress, including Transportation Secretary Elaine Chao, received the loans. Chao’s family’s shipping company Foremost Maritime received between $350,000 and $1 million. The Transportation Department stated that “the Secretary has no connection to the business and she had no idea a loan was obtained.”

KTAT Corp., a Tulsa-based operator of fast food franchises owned by Rep. Kevin Hern (R-Okla.), reported receiving between $1 million and $2 million to retain 220 jobs, according to the data. Hern had advocated increasing the benefit size available to franchisees.

“It was a bipartisan idea meant to simplify the way loans were calculated,” said Hern spokeswoman Miranda Dabney. “These PPP loans are all about paying employees so any expansion or increased funding measures were aimed at helping employees of franchisees stay employed. The whole program was designed to keep people off of unemployment.”

Three car dealerships affiliated with Rep. Mike Kelly (R-Pa.) reported receiving between $450,000 and $1.05 million to support 97 jobs. Spokesman Andrew Eisenberger said that Kelly is not involved in the day-to-day operations or in the discussion between the dealerships and the PPP lender.

Several plumbing firms affiliated with Rep. Markwayne Mullin (R-Okla.) also received between $350,000 and $1 million. A spokeswoman said Rep. Mullin is not involved in the daily operation of the businesses.

“They should not be the recipients of those funds,” said Craig Holman, an advocate from the watchdog group Public Citizen. “If they are the recipients of their own cash that they’re handing out, it really raises questions of self-dealing.”

Steve Ellis, president of Taxpayers for Common Sense, said that “you can write the policy to be blind to the nature of the entities, but certainly if you are involved in drafting it, or modifying it to benefit certain businesses, that’s where the alarm bells should be raised.”

Nearly half of the loans went to five industries including health-care and social assistance industry, professional and technical services, construction, manufacturing, hotels, restaurants and other food service businesses.

Recipients also include foreign firms, defense contractors, and 43 Planned Parenthood locations.

With an average loan size of $107,000, the program issued $521 billion in all and helped support 51 million jobs, accounting for 84% of small business workers, Treasury and SBA officials said.

Congress has extended the deadline to apply through August 8.

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Economics, Finance and Investing