The Controversy Surrounding the PPP Loans for New Businesses in Los Angeles: A Closer Look

According to newly released data, more than 230,000 PPP loans for new businesses in Los Angeles were approved through the Paycheck Protection Programme from the U.S. Small Business Association in Los Angeles County. With an average loan amount of about $100,000, some 231,530 PPP loans totaling $23.3 billion were approved in Los Angeles. The SBA released detailed information about approved borrowers through the $659 billion Paycheck Protection Programme late Tuesday from the federal government, including names, amounts, addresses, industry codes, and lender information through the COVID relief programme for the approximately 5.2 million PPP loan for new business in Los Angeles.

Including American City Business Journal's information, which was released in response to a lawsuit filed by several news organizations, forgivable loans to pay for payroll and other costs, which is the parent company of L.A. Biz. PPP, a $659 billion programme first introduced in the CARES Act in April, aimed to help small businesses and nonprofits with 500 employees or fewer with low interest. Its rollout has been uneven and controversial, with some high-profile big businesses getting approved for loans — including the Los Angeles Lakers, which ultimately returned the money — and allegations of fraud. In the 18 congressional districts that cover the county, L.A. Biz analyzed the data for loans in the 23rd, 25th, 26th, 27th, 28th, 29th, 30th, 32nd, 33rd, 34th, 35th, 37th, 38th, 39th, 40th, 43rd, 44th, and 47th. Some of these districts overlap with adjacent counties, namely the 23rd, 25th, 26th, 27th, 35th, 39th, and 47th. These businesses had an average of just over one employee because for PPP loans of less than a thousand dollars, around 1,100 businesses were approved, including one that was approved for a dollar, though it's not clear whether that is a data-entry error. 

Still, it was lucky to get a loan at all, compared to larger enterprises like the Los Angeles Lakers and Shake Shack, which awarded millions to other small businesses that applied for PPP loans for new businesses in Los Angeles. For even a few thousand dollars, many small-business owners, particularly minority-owned businesses, say they were denied loans. After facing public criticism and ultimately returning the funds, several large businesses, among others, have claimed that the loan amounts they received were insufficient to provide any meaningful assistance. The PPP's initial lack of transparency has contributed to misconceptions about the programme's intended goals and objectives.

With a disconnect between the controversy surrounding the PPP’s design and how Americans think about business, which supports businesses with 500 employees or fewer, there is a lot to do. As the programme nears a close, as well as why the programme ended up being so controversial—the last day for applications was extended from June 30 to August 8—Recode has analyzed the achievements and drawbacks of the Paycheck Protection Programme (PPP) amid uncertainty regarding the possibility of another round of loans.

As the programme nears a close, as well as why the programme ended up being so controversial—the last day for applications was extended from June 30 to August 8—and it’s unclear whether there will be another round of loans, Recode examined the successes and failures of the PPP. To return their PPP funds, given the initial uncertainty surrounding the PPP loan eligibility requirements and the subsequent guidance, the SBA created a safe harbour deadline for businesses.