By Samuel Strait – Reporter at Large – February 28, 2022
One of the more brilliant ideas that has occurred over the past two
years of the Pandemic came in the form of the Paycheck Protection
Program from the Small Business Administration of the Federal
Government. Billed as a way for small businesses of 500 employees, (yes
500 employees is considered a small business by the Federal Government)
or less to make payroll when the business was shut down by local
mandate. Businesses who SELF VERIFIED that they required funds due to
the epidemic could apply for a PPP loan of up to 2.5 times their average
monthly payroll in 2019 (with different windows for seasonal and startup
businesses). Yearly salaries were capped at $100,000 for payroll
calculation purposes. Companies could receive up to $10 million in
FORGIVABLE LOANS. According to the SBA , 11,475,003 loans were approved
at $69,087 on average or just short of $800 billion dollars were lent,
most to be forgiven.
It took several lawsuits from the public to make information available
as to who got the loans and for what purpose they were spent. Not all
of the money was spent for paycheck protection, as businesses were
allowed to spend up to 40% of what for most became a grant on mortgage
interest payments, rent, utilities, and leases. Unfortunately due to
the nature of the lending practices of the SBA, a great deal of graft
and corruption was discovered over the course of the program. Billions
of dollars were lent out to those in prison, foreign nationals, and
larger corporations with substantial assets who were ineligible. To
date very little of that money has been recovered.
While the nuts and bolts of the program might be interesting, the
purpose of this article is to illuminate the impact that PPP loans had
on Del Norte County’s 27,000 residents. Granted on the scale of the PPP
program most loans to local businesses tended to be relatively modest.
Of the 314 loans approved for Del Norte County, 117 were for more than
$100,000, 58 for $50,000 or more, leaving 139 of less than $50,000. The
big winners in the County in order of appearance were: 1. Elk Valley
Casino at $2,000,494, 2. Alexandre Family at $1,395,323, 3. Tolowa
Dee-Ni Nation at $1,164,100, 4. Yurok Corporation at $918,538, and 5.
Dahlstrom and Watt Bulb Farms at $915,577. The Native American Tribes
had the largest jackpot, raking in just over $4,000,000 total during the
two year period.
While this no doubt benefited many families of employees in the local
communities within Del Norte County, since the relaxing of mandates
regarding California businesses many employees are reluctant to return
to work. This has resulted in many businesses and other employers
scrambling for workers. It has also revealed a fair number of abuses by
both business and their employees. Payroll using PPP loans while workers
were fully employed, workers collecting paycheck money while also
claiming unemployment benefits, and sole proprietor business owners
paying themselves as employees when there were none.
While this article is not meant to expose any local business owner of
improper or illegal practices while in the PPP program, there exists the
problem that abuse of the loan program was not limited to a few
individual loans. Due to the fact that most loans when applied for
were SELF VERIFIED and the Federal Government, in particular the SBA, is
not always careful with Taxpayer money, it would be unfortunate if
malfeasance by either businesses or employees in the County were
revealed. Similarly, it would be unfortunate if as a result of the
generosity of the Federal Government during these past two years has
resulted in the current labor shortage, another failing of government
will be exposed. This unfortunately has become an all too familiar
story regarding governments at all levels. As the Country’s National
Debt has exploded over the past several years and inflation is through
the roof, corruption by small business is a failing that this Country
should not have to endure. The life blood of our local communities flow
through our local small businesses, something local residents should
appreciate.
Great article Sam, and some fine points made about the Paycheck Protection Program. What I found most interesting is the businesses that received the lion’s share of PPP loans in Del Norte County. As I recall, the State of California exempted a variety of businesses from the most draconian business closures and mandates. Native American Casinos, gay bath houses, striptease clubs, pot shops and massage parlors seemed to walk on water through the “Pandemic” due to the critical role they served toward maintaining public health. Meanwhile, competing small businesses floundered or sank into bankruptcy.
I also remember a 1,500+ signature petition from local residents opposed to improvements to a dangerous stretch of road, prone to deadly accidents, that were being done to speed traffic for a certain local Agricultural Enterprise. That petition was ignored by both City and County government in favor of the Agricultural Enterprise. Not that there was any form of favoritism, cronyism or graft involved; but the whole affair begs the the following question:
If the Agricultural Enterprise was so devastated by Covid-19 that it required a huge PPP loan; then why did it require road improvements that would allow quicker shipment turnarounds, and a higher volume of product going to market?
I also seem to remember Congress approving targeted grants directly to Native American Tribes and our Nation’s Farmers who were suffering from Covid related closures. Detailed information about the recipients of those grants is not available to the public; but it would be interesting to know if our local Tribal Governments and Farmers received both targeted grants and PPP loans.
Double dipping into the public troth is nothing new; and the nature of business, especially corporations, is to make money in any way available. If laws or rules were broken, odds are good that they will never be caught. If they are caught, they can just give the money back after accruing interest. Governments will seldom take them to court, and NOBODY in a corporation will ever go to jail or be held personally responsible. The worst that can happen is a settlement to pay a modest fine which normally won’t come close to the interest earned on the capital.
In my estimation, the PPP program did what all government programs are designed to do. The Program redistributed wealth to the least deserving fat-cats, while starving the hard working Middle Class into extinction. Big corporation monopolies become stronger while free enterprise is destroyed. Democrat Corporate-Communism wins again.