The once troubled emergency small business lending program has stabilized, turning into a cornerstone of the government’s economic response to the coronavirus crisis and credited with having a significant impact on a positive May unemployment report that stunned economists.
But one issue remains a point of frustration for lawmakers: its lack of transparency.
The issue has simmered for months, with lawmakers on both sides of the aisle asking for more detailed information about the more than 4 million recipients of the more than $500 billion disbursed through the program so far.
Despite continued efforts on Capitol Hill to obtain that data, it is information is not coming any time soon, according to administration officials.
“As it relates to the names and amounts of specific (Paycheck Protection Program) loans, we believe that that’s proprietary information, and in many cases for sole proprietors and small businesses is confidential information,” Treasury Secretary Steven Mnuchin said Wednesday in front of the Senate Small Business Committee.
The Small Business Administration, the agency running the program, has regularly put out topline details on loan numbers, lenders and data on industries and areas where the loans have been disbursed. But information on which businesses received the loans – and how much they received – has remained shrouded in secrecy.
“The Paycheck Protection Program is designed to be a lifeline to help vulnerable small businesses with the greatest need, particularly the minority, women and veteran-owned businesses that are struggling,” House Speaker Nancy Pelosi said in a statement Friday. “The Administration’s decision to hide basic PPP loan data is a disturbing sign of its lack of concern for who gets this funding, how much they receive or why.”
Ironically, the one window into that level of detail has come from the very companies that have drawn the most scrutiny: public companies. Much of the backlash that led public companies to return more than $12 billion in loans came due to those companies filing disclosures with the Securities and Exchange Commission.
But public companies make up just a sliver of the more than 4 million borrowers in the program. That raises issues from the very lawmakers who drafted – and are overseeing the implementation of – the program.
“How can we know which businesses still need help if we do not know which businesses have received help?” Sen. Ben Cardin, the top Democrat on the committee, asked Mnuchin.
Cardin has repeatedly made clear that the SBA releases more detailed recipient data on other lending programs, including the 7(a) program that the Paycheck Protection Program is modeled after.
“The Trump Administration has provided no reason why PPP loans should be less transparent than 7(a) loans, and Ranking Member Cardin expects SBA to follow precedent on making PPP loan information publicly available,” a Democratic committee spokesperson told CNN.
The Government Accountability Office, a top watchdog, also hasn’t received the loan-level detail. Mnuchin said the administration is working with the GAO to provide more information.
Cardin and several of his colleagues have attempted to move legislation to require the SBA to make public detailed data on how small business relief funds are being distributed.
Mnuchin’s testimony made public what officials have been telling lawmakers and reporters behind the scenes for weeks, but it hasn’t stopped lawmakers from attempting to find avenues to obtain more granular data.
Senate Small Business Committee Chairman Marco Rubio told CNN on Thursday that he has repeatedly heard from small businesses about concerns that the disclosure of the size of their loan amounts to a “trade secret and a competitive disadvantage that can be used against you.”
“If you’re a small business, this is about payroll. And so people are going to be able to tell how much your payroll is based on your loan amount,” the Florida Republican said. “In essence, you know your competitors can figure out how much their competitor somewhere else in the country is making and sort of either poach employees or undercut their own.”
Rubio said he’s continuing to work to try and resolve the issue and said there may be a “middle ground” where the names of borrowers are released, but not the specific amount of their loan, or set a threshold above which detailed information would be released.
“I don’t really think people are that fired up about a $50,000 PPP loan,” Rubio said. “I think my sense is people really want to know about the $5 million or $8 million and $10 million ones.”
This story has been updated to include reaction from House Speaker Nancy Pelosi.