This story was updated to reflect statements from LULAC.
The first $349 billion of the Paycheck Protection Program was doled out by the federal government in less than two weeks, and millions of it went to big businesses.
Many small businesses were left out, and the second round of funding — which is waiting for the U.S. House’s vote — purported to fix it.
But the $480 billion bill approved Monday by the U.S. Senate — with money for everything from hospitals to testing to businesses — still won’t get to the least-served businesses, argue advocates.
$20 million dollars for Ruth’s Chris Steak house, $10 million for Shake Shack — which later returned the money, $2 million for the international modeling agency Whilemina, the list of loans to large companies was long and large. So much so that the Trump administration took to chiding these companies.
“The intent of this money was not for big public companies,” said Steven Mnuchin, U.S. Treasury secretary.
Many small businesses, which it was intended for, were left out. Some have filed class-action lawsuits saying their banks — Wells Fargo and Chase — gave preferential treatment to larger companies.
The next round of federal funding was supposed to push $60 billion into underserved, small businesses through credit unions and community development financial institutions.
But that $60 billion was then chopped down the middle with half the money going through banks with more than $10 billion in assets, the Bank of Americas and JP Morgans of the world. Banks that are unlikely used by underserved communities.
"We strongly oppose H.R. 266 the Paycheck Protection Program and Health Care Enhancement Act," said the League of Latin American Citizens (LULAC) in a letter to Congress Wednesday.
LULAC argues the bill provies more money to large banks and wealthier businesses over small ones.
That's because rather than ensure the remaining $30 billion went through institutions those businesses use — like CDFIs, Minority Depository Institutions or even credit unions — the Senate left it open to all banks with less than $10 billion in assets.
That’s about 97% of all banks, according to the Federal Deposit Insurance Corporation.
Noel Poyo with the National Association for Latino Community Asset Builders (NALCAB) said the result will, again, leave out underserved businesses.
“It just comes off as ghoulish when you recognize that there are people not being served, and then you play games with how you get money out there and you know, it's not going to go to the underserved business,“ he said.
LULAC argued that businesses owned by people of color have been hardest hit by COVID-19 and these people have less credit and less ability to abosorb the costs to their businesses.
The House of Representatives is expected to take up the bill before the end of the week. Advocates are calling on the body to ensure the money goes to these businesses.
Paul Flahive can be reached at Paul@tpr.org or on Twitter @paulflahive.
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