Predatory lenders set their sights on the Paycheck Protection Program (PPP) in the coronavirus relief CARES Act—money intended to go to small businesses to prevent their having to lay off workers—and cashed in, netting anywhere from $9 billion to $23 billion. (Disclosure: Kos Media received a Paycheck Protection Program loan.) The Daily Beast looked at records released last week by the Small Business Administration (SBA) and found 35 companies that provide payday loans—the loans taken out against car titles and other high-interest, low-dollar borrowing options—got the money after lobbying Congress and filing lawsuits to get their hands on the money.
Back in April, members of Congress from both parties lobbied the Treasury Department to allow these businesses to get the loans. That's the same month that the SBA denied such a loan, saying that it was not in the "public interest" for Payday Loan LLC, which was trying to get $644,000, to get a forgivable loan. The company filed a lawsuit, and on May 11, Daily Beast reports, "Payday Loan LLC withdrew its suit after saying it received a 'firm offer' for a PPP loan, and federal records show that it received one worth $350,000 to $1 million on May 3." The SBA didn't respond to Daily Beast's request for comment as to what happened to make it change its mind and make the suit go away.
"It's outrageous that payday lenders have access to these critical funds," said Sen. Sherrod Brown, the ranking member of the Senate Banking Committee. He and fellow Democrats wrote to the SBA back in May, urging SBA to reject these lenders. "Taxpayer money should not go to payday lenders who rip off working families and trap consumers in cycles of debt."
"It should go without saying, predatory lenders who charge working Americans up to 400% for payday loans should not be given taxpayer grants or near zero interest loans," Kyle Herrig, president of Accountable.US, a liberal watchdog group, told the Daily Beast. "Congress must establish a fairer and more transparent system for getting relief to real small businesses," said Herrig, "not predatory lenders looking for a handout."
This is one more black eye for the PPP, a program that has done some good but has definitely outlived it usefulness. Too many legitimate small businesses, run by women and by people of color particularly, have been shut out of the process. Any job kept is good, but it's been shown again and again that the businesses that have benefited from this program have done so because they have the power and the connections to get it. It's time to retire this program, get the banks out of the way, and just give grants to business owners to stay afloat.
