Data discrepancies cast significant doubt over the Trump administration’s claim that the Paycheck Protection Program saved 51 million jobs.
The federal government’s small business relief program may have saved fewer jobs than the president and his allies have claimed, according to new analyses from the Washington Post and Bloomberg.
The Trump administration has stated that the Paycheck Protection Program has “supported” more than 51 million jobs during the coronavirus pandemic, but a Post analysis of data on 4.9 million loans worth more than $500 billion released last week by the Small Business Administration shows that many companies are reported to have “retained” far more workers than they even employ.
The Post spoke to six businesses that said they had fewer employees than the SBA reported the businesses had retained. The agency’s data, for example, indicates that the loan provided to Georgia manufacturer International Dunnage preserved more than 500 jobs, the maximum allowed for PPP borrowers. But the company has just seven employees and two owners. “I don’t know where you got the 500,” owner David Crenshaw told the Post.
The data also shows several companies received loans of more than $1 million but somehow only retained one job. Frank Demandt, the owner of a Miami architectural firm, told Bloomberg he has four employees and that he only received $19,700, not the $1 million to $2 million listed in the SBA data. Demandt’s lender, BankUnited Inc., confirmed the loan amount to Bloomberg and said it wasn’t sure why the SBA data said otherwise.
The data also shows several companies received loans of more than $1 million but somehow only retained one job.
In some cases, the SBA’s data on jobs saved in each industry also surpasses the number of total workers in those sectors. For example, the data suggests 114,000 jobs were saved in the landscape architecture field, but there are only about 20,000 landscape architects in the entire country, according to Labor Department statistics.
The Bloomberg analysis, meanwhile, found that 554,146 borrowers indicated they retained zero jobs while another 324,122 borrowers left the “jobs retained” field blank. Together, that means nearly 18% of all loans did not contribute to preserving jobs, if the SBA data is to be believed.
Bloomberg also found that data associated with nearly 1,000 loans indicate they saved 500 jobs, even though the loans were less than $150,000—an unlikely proposition since loan amounts were supposed to be based on two-and-a-half times a company’s average monthly payroll. “In 209 of those cases, it implies an average monthly salary of $4 or less per employee,” Bloomberg reporters wrote.
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Together, these discrepancies cast significant doubt over the SBA’s data and the effectiveness of the program. SBA and Treasury Department officials said that job numbers were provided by borrowers, attributing blank or inaccurate data to them. Those numbers were not thoroughly vetted, according to Reuters. The SBA and Treasury were eager to provide loans quickly and so only required borrowers to make a good faith promise that the information they provided to lenders and the SBA was accurate.
Banks, which provided the loans, have pointed the finger at the SBA, which they say is misstating jobs data. Zions Bank in Salt Lake City issued 476 loans of more than $150,000 on May 3. According to the SBA data, every single one of those borrowers has exactly 500 employees. Bank spokesman Rob Brough told the Post the SBA likely experienced an error in its reporting system, which caused the numbers to be “inaccurately reported.”
Questions over the accuracy of that information and the SBA’s data underscore the growing concern that the program may not have been the “indisputable success” that the Trump administration is suggesting, even as the language they’ve used has muddled that argument as well.
During a July 2 news conference, President Trump said the program is “saving and supporting the jobs of tens of millions of American workers,” while Treasury Secretary Steven Mnuchin said it was “supporting an estimated 50 million jobs” during a congressional hearing last month. The SBA website, meanwhile, states that as of June 30, “The PPP supports 51.1 million jobs, as much as 84% of all small business employees.”
Economists like Beth Ann Bovino, chief U.S. economist at S&P Global Ratings, have disputed that number, arguing that the data collection errors likely led to an overcount of jobs saved. “At this point in time, it’s hard to believe that the 4.89 million PPP loans granted by the SBA would support 51.1 million small-business jobs,” Bovino told the Post.
“At this point in time, it’s hard to believe that the 4.89 million PPP loans granted by the SBA would support 51.1 million small-business jobs.”
Philip Mattera, a director at Washington-based non-profit Good Jobs First, which focuses on government accountability, also questioned the number. “I’m skeptical of the total number,” he told Reuters. “My guess is there wasn’t much rigor that went into the reporting of these jobs figures.”
The new reports have only fueled further backlash to the program, which previously came under fire for providing loans to billionaires, businesses with ties to Trump administration officials, Republican donors, and private equity firms, while simultaneously failing to substantially assist Black and Latino-owned small businesses.
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The inability of many business owners of color to obtain loans likely played a role in the 41% decline of Black small business owners and the 32% decline in Latinx-owned businesses between February and April, according to a study from the National Bureau of Economic Research (NBER). In comparison, the number of businesses owned by white people fell by only 17% during that time, the study found.
While a general consensus has emerged that the program did provide a lifeline for many small business owners and prevented the nation’s already-surging unemployment rate from being higher, the program has not been a cure-all. Researchers at Harvard estimated that nearly 110,000 small businesses across the country shut down permanently between early March and early May, based on data collected by Alignable, a social media network for small-business owners.
Even those companies that benefited from PPP may now be on the verge of collapse as well. Eighty-four percent of firms that received PPP loans expect to run out of money by the first week of August, according to a new Goldman Sachs survey released this week. Only 16% of recipients anticipate being able to maintain their payroll without more government aid. Consequently, more than nine in 10 firms that received loans want Congress to allow them to apply for a second loan.
Nearly 110,000 small businesses across the country shut down permanently between early March and early May.
A coalition of House and Senate Democrats have introduced legislation to allow small businesses with 100 or less employees that meet certain requirements to apply for a second loan until Dec. 30. The bill has yet to receive a vote, but could be part of another coronavirus relief bill, should Congress reach a deal.
But even if that bill does pass, the PPP’s effectiveness remains in question, with some Democrats saying the faulty data was indicative of the Trump administration’s overall management of the program.
Keya Vakil Keya is a reporter at COURIER, where he covers everything from healthcare to climate change. Prior to joining Courier Newsroom, Keya worked as a researcher in the film industry and dabbled in the political world.
