(WWJ) A Michigan senator is calling for an investigation into the Paycheck Protection Program intended to be a parachute for small businesses that some believe quickly became a loan program for already wealthy companies.
Gary Peters is calling for the Government Accountability Office to look into how funds were distributed, saying many small and minority-owned businesses in Michigan did not receive assistance.
Meanwhile, Sen. Debbie Stabenow (D-Michigan) announced Wednesday that Congress had passed a bill to add $310 billion to coronavirus relief to replenish the Paycheck Protection Program. $60 billion of this will be set aside for Community Development Financial Institutions, Minority Depository Institutions, community-focused lending intermediaries, and the smallest community banks and credit unions.
The Paycheck Protection Program was created through the CARES Act and meant to help businesses with less than 500 employees with up to eight weeks of payroll costs. The loans can be forgiven if companies keep their workers employed.
In the first wave of funds that Peters is questioning, the NY Times reported that small print in the bill allowed big chains like Shake Shack, Potbelly and Ruth's Chris Steak House to "get tens of millions of dollars" while many smaller restaurants walked away with nothing when the $349 billion fund was exhausted last week.
Peters says the Government Accountability Office needs to conduct a wide-ranging investigation into where the funds went, who got them, and the size of the businesses.
The senator says while Michigan is fourth in unemployment filing, the state is 35th for assistance under the program. The original funding was depleted just weeks after Congress passed it.
"As small businesses in Michigan and across the country continue to face dire financial challenges, I am concerned that PPP loans may not have gone to those who need them most," wrote Sen. Peters in a press release. "Over 1 million Michigan residents, many of whom worked for small businesses, have filed for unemployment in the past month alone—the fourth highest in the nation. However, Michigan currently ranks 35th out of 50 states for processed PPP loans. There is also evidence that a substantial amount of PPP loans have gone to large hotel and restaurant chains, rather than the struggling small and minority-owned businesses who may be forced to permanently close their doors without urgent assistance."
A small business owner who applied for the money and was rejected provided the following letter to WWJ Newsrdio 950:
Shake Shack is among the companies that made national headlines when it was revealed it had received a $10 million loan under the program. When it was outed, the company acknowledged that the Paycheck Protection Program had been carried out unevenly, and agreed to return the money.
