PPP Loans Were Supposed to Help Workers. Instead, They Evaporated Into Thin Air.
American businesses received billions of dollars to continue providing jobs during the pandemic. But workers haven’t seen much of that money — so where did it all go? In one typical Michigan town, it seems to have gone straight into employers’ pockets.
The Rustic Steakhouse & Saloon in St Charles, Michigan. (Courtesy of Joe Wilkins)
A year after the last Paycheck Protection Plan (PPP) loans were distributed to businesses nationwide, communities like the former coal mining town of St Charles, Michigan are beginning to ask where hundreds of billions of federal stimulus dollars ended up.
Between 2020 and 2021, 106 businesses in St Charles received $6,467,888 in PPP loans. The amount of wealth transferred directly to business owners amounts to $3,411 per resident — in a town where 17.3 percent of the population lives below the federal poverty line. This begs the question: How was all that money used?
The answer is hard to find out, and that’s by design. These loans were functionally grants. The Small Business Administration (SBA) advised lenders to “rely on borrower representations” when processing loan forgiveness applications. To qualify for loan forgiveness, the SBA stipulates that 60 percent of the borrower’s PPP loan must contribute to the lender’s payroll. Lenders were responsible for providing the PPP loan forgiveness application, guiding the borrower through the process, and accepting the borrower’s claims.
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