(TNS) — The federal government released data this month that provides a window into who received money from its $659 billion small business coronavirus relief effort known as the Paycheck Protection Program, or PPP.
But with Congress now considering another round of aid being referred to as “P4,” a number of North Carolina companies say their loan data was inaccurate in the first report, and watchdog groups say the inconsistencies make it difficult to gauge the program’s effectiveness. About $130 billion, money intended to help companies preserve jobs during the pandemic, is still available.
Several businesses said although they were listed in the database, they did not actually receive funds through the program. Others said the number of jobs the database says they retained by receiving the loan was either too large or too small.
Over 2,100 businesses in North Carolina retained zero jobs as a result of the loans, according to the database. The Small Business Administration has yet to offer a comprehensive explanation for the errors. An SBA spokeswoman said that while the application asked for the number of employees, businesses did not necessarily have to provide that, though they will in order to receive forgiveness on the loan.
Rochelle Sparko, director of NC Policy at The Center for Responsible Lending, said many people applying for loans as sole proprietors left that space blank rather than count themselves as employees.
“In the early days of filling out the application, the SBA didn’t give good definitions or instructions for people in determining who was an employee and who wasn’t,” Sparko said. She also said some of the errors stemmed from the SBA’s electronic loan processing system, which quickly became overwhelmed by the unprecedented wave of loan applications.
“The entire data for this program is a mess,” said Kyle Herrig, president of Accountable.US, a government watchdog group that has been tracking PPP. “The administration has not been forthcoming at any point in the process with the American people. It’s unclear what we’re supposed to believe.”
No Money from Loans
Several companies said they applied for a loan, but did not wind up accepting the money.
Shannon Giles, a spokeswoman for the SBA, said lenders entered the applicants’ information into the E-Tran electronic processing system. If they did not cancel the loan in that system, it was listed in the disclosure, she said.
Bojangles Restaurants Inc. is listed in the database as receiving between $5 million and $10 million to help keep 500 jobs. Brian Little, spokesman for the restaurant chain based in Charlotte, said it applied for and was approved for a loan, but decided not to move forward with the process and never received the money.
“I’m not sure why we would have been included (in the database), since we never signed loan documents or accepted funding,” Little told the Observer this month.
A number of North Carolina country clubs, including Raleigh’s North Ridge Country Club, are listed in the database as receiving millions of dollars. But in an email, Jeff Earley, North Ridge general manager and chief operating officer, said though the club did initially apply, it halted the process after learning it would be ineligible for funds.
“We did not receive a PPP loan, nor have we received any employee assistance outside of the generosity of our membership,” Earley said.
Inaccurate Jobs Numbers
When the pandemic hit in March, Charlotte science museum Discovery Place had to temporarily lay off a significant portion of its staff and reduced pay for those who remained, Catherine Wilson Horne, president and CEO of Discovery Place said in a statement.
“This was a very painful decision,” she said. “But with our doors closed, our revenues were substantially reduced… We have now been closed for four months during our busiest season of the year.”
The museum applied for and received between $1 million and $2 million in PPP funding, SBA data show. The SBA says the loan helped the museum retain 188 jobs.
But the 188 figure represents the museum’s average employment, including full- and part-time staff, in 2019, Wilson Horne said. The loan itself helped support 66 employees who are on payroll, including 35 the museum was able to bring back.
A Washington Post analysis found that many companies were listed as retaining more workers than they employ. And for more than 875,000 of the loans, the data says zero jobs were retained, according to the Post.
First Presbyterian Church in Raleigh received a loan for $150,000 to $350,000, but the SBA says it retained zero jobs as a result.
Edward Bruce, the church administrator, said First Presbyterian submitted a joint application for the church and its child development center. The church reported 42 full-time and part-time employees on its PPP application, he said. He said he has “no knowledge” of why the SBA’s database listed zero jobs.
Todd Hill, president of AJT Technology Solutions in Charlotte, was one of over 700 North Carolina businesses for which the jobs retained field was left blank. Hill said in an email that his relief funds actually helped him keep six jobs, adding that the application did not ask for that figure.
Measuring PPP Success
Some errors come as little surprise, given the unprecedented speed of the program’s roll-out, according to Paige Ouimet, associate professor of finance at UNC’s Kenan-Flagler Business School.
“The goal at the time wasn’t to have 100 percent following the rules, it was to get the money out quickly — and they accomplished that,” said Ouimet. “In some of these emergency response(s), we can’t expect 100 percent compliance and it doesn’t mean that the program was a failure.”
The lack of concrete retained jobs data was not the only information that the SBA didn’t end up requiring in applications.
An SBA Inspector General report from May found that the SBA also did not require applicants submit demographic data, an oversight that could make it harder to determine whether PPP funds made their way to rural, minority and women-owned businesses.
The major concern, Ouimet said, is when such faulty data is used to fuel decision-making about future programs.
“It’s going to be misused,” she said, noting Congress’ work on planning the next stimulus package. “I’m sure people are pulling these numbers to either say that PPP was a failure or PPP was a success. Either way we need to acknowledge that it’s unreliable data.”
Marie Johns, a former SBA deputy administrator during President Barack Obama’s administration, said extensive and reliable data is needed to make sure the program works correctly.
“In any organization whenever you’re trying to get something done,” Johns said during a June call with reporters, “you don’t know whether you’re hitting the mark, you don’t know where you need to improve ... unless you’re tracking the data.”
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