Members of Congress got P3 loans faster than most small business owners

When businesses linked to members of Congress received emergency loans from the Paycheck Protection Program, they had one thing in common: The loans were made quickly.

On April 5, two days after the program launched, a McDonald’s franchise group owned by Representative Kevin Hern (R-Okla.) Secured a loan of $ 1 million to $ 2 million. On the same day, the tractor dealer as Representative Vicki Hartzler (R-Mo.) owns with her husband got a loan between $ 350,000 and $ 1 million.

On April 8, an auto dealership owned by Representative Vern Buchanan (R-Fla.) Became one of the first dozen businesses in Florida to receive a loan of over $ 150,000 from BMO Harris Bank; the loan was worth between $ 2 million and $ 5 million. A second dealership in which Buchanan has a significant stake, in North Carolina, received a loan of $ 350,000 to $ 1 million a day later.

The speed of these loans shows how frustrating an emergency relief system countless small business owners nonetheless worked quickly and efficiently for elite owners. And while this may not necessarily be proof of wrongdoing, businesses of all stripes, including those linked to lawmakers, are facing a financial cataclysm from the coronavirus pandemic this fact begs the question. whether lenders have prioritized bailouts for members of Congress while tens of thousands of others have struggled to tap into the same program.

But given the way the loan program was administered, the public maybe never learn if there were any conflicts of interest.

All in all, among the More than 20 loans that were identified as going to businesses affiliated with members of Congress, almost all loans were made before the first round of funding dried up. One of the few exceptions was for a type of business that was not initially eligible for a loan – a casino developer run by Representative Susie Lee’s husband (D-Nev.). This business was approved for loans days after Lee and other Nevada officials were successful press the Small Business Administration to change its rules.

When the Paycheque Protection Program opened on April 3, it was with the promise that the federal government would process claims on a first come, first served basis. In fact, Congress has given banks a lot of leeway in lending decisions. Some of the country’s largest lenders, like Citibank and Chase, moved their most important customers on the front line and offered them a ‘concierge service’, while ordinary retail customers were forced to apply for loans through flawed or overwhelmed online portals. When the program ran out of money after just 13 days, 80% of all small businesses who applied were still waiting for a response.

Congress has since increased P3 funding from $ 349 billion in early April to a total of $ 659 billion. And the program was considered a huge success by both sides for helping to save more than 50 million jobs in the face of an unparalleled modern economic disaster.

But the initial shortfall was not a problem for many members of Congress or their families. Companies in ownership or in part by Senator Lamar Alexander (R-Tenn.) and Representatives Matt Gaetz (R-Fla.), Mike Kelly (R-Pa.), Rick allen (R-Ga.), Markwayne Mullin (R-Okla.), Devin Nunes (R-California) and Roger williams (R-Texas) were all approved for loans before the first pot of money ran out, according to recently released Treasury Department files.

The Fiesta Restaurant Group, where Representative Debbie Mucarsel Powell’s (D-Fla.) Husband is an executive, received a loan of 10 million dollars from JPMorgan Chase on April 14 and an additional $ 5 million two weeks later. The company, which trades on the Nasdaq and owns more than 300 restaurants, returned the money after people were outraged that large companies with other means of raising funds had taken out PPP loans.

Companies with links to Congress that have received loans in subsequent PPP funding rounds include the law firm who previously employed Representative Nita Lowey’s husband (DN.Y.); he is retired from the firm and retains “no economic interest”, his spokesperson said. Others included EDI Associates, a hotel investment company in which the husband of House Speaker Nancy Pelosi (D-Calif.) holds a minor stake, and one vineyard partly owned by Nunes.

The speed and ease with which members of Congress and their businesses were approved for federal aid is not automatically evidence of a conflict of interest or an indication that their businesses are abusing money. And the loans that companies in this history have received will allow them to continue to employ nearly 2,800 workers, according to the numbers the companies have reported on their loan applications.

All businesses had to meet the same requirements to be eligible for a loan, but the processing of their applications and the order is left to the lenders. Banks had enormous discretion on how to sort loan applications and little obligation to disclose their decision-making processes.

Firms with large assets – which describes many businesses owned by members of Congress – as well as those with existing loans and well-established commercial banking relationships, had a Easier time receiving help as little mom-and-pop stores. The Trump administration and the banks subsequently changed the lending rules that made this the case. And there was advantages of turning to small regional banks: Hern’s lender of choice, American Bank and Trust Company, processed just 18 loans over $ 150,000 statewide in Oklahoma.

“If you have a business affiliated with someone important and the bank has complete discretion over how to process loans and who to prioritize, who is the bank going to embrace?” It will be the member of Congress, ”said Richard Painter, a lawyer who served in the George W. Bush administration as an ethics counselor. “They are going to put them immediately at the front of the line. At least the banks can do it if they want to.

The PPP loan program was structured so that if there were any conflicts of interest, the public did not know about it. In the past, if a business had ties to a congressman, that member had to seek ethics approval from the Small Business Administration before the business could apply for SBA funds. But when it launched the loan program, the Trump administration discreetly exempted members government of this waiver process. The administration spoke of the need to quickly release aid.

In May, Representatives Allen, Hartzler, Hern, Kelly, Mullin, Nunes and Williams – all of whom have stakes in companies that have taken out loans – voted against legislation that would have forced the Trump administration to disclose a list of names of companies receiving PPP loans. The Treasury Department finally agreed to release the names of major loan recipients under public pressure.

Several financial institutions that have lent to businesses connected to Congress have lobbied Congress or have a network of ties with the members themselves.

BMO Harris, a large multinational based in Canada, is used to making substantial loans to Florida representative Buchanan. at critical times. In late 2016 and 2017, when Buchanan, who is a powerful member of the House Ways and Means Committee, was helping craft what would become President Donald Trump’s tax cut legislation, BMO Harris was lobbying the question and lent Buchanan large sums of money for luxury. purchases: between $ 1 million and $ 5 million to buy a yacht and between $ 5 million and $ 25 million to buy a private jet, according to his personal financial statements.

Buchanan used to sit on a regional council of SunTrust Bank, now known as Truist after a merger. In addition to getting loans from BMO Harris, one of its companies got a loan from Truist; the bank loaned between $ 350,000 and $ 1 million to a Honda dealership Buchanan owns in Florida.

The two loans to casino companies run by Lee’s husband came from Zions Bancorporation, a Utah bank that halls Congress on small business loan legislation. The bank did not respond to requests for comment from HuffPost.

BMO Harris and Truist spokespersons said banks were not prioritizing loan applications.

“Truist’s PPP applications were processed through a single application portal made available to customers on a first-come, first-access basis, with no preference given to any customer, including larger or more affluent customers.” , said his spokesperson.

Several members of Congress who voted against the legislation to reveal the names of companies that have taken out loans said the bill created too much red tape for a crucial program.

A spokesperson for Georgia Representative Allen said he and his wife had relinquished decision-making power in the construction company they owned, and that Allen had consulted with the House Office of General Counsel about the eligibility of his business to take out a loan. A spokesperson for Oklahoma Representative Mullin said he was not involved in the day-to-day operations of his businesses, a group of heating and plumbing companies. A spokesperson for Lee said The Daily Beast that the Nevada congressman has no control over the casino company or over decisions to apply for or approve loans.

Missouri Rep. Hartzler, whose tractor dealership employs 54 people, mentionned her loan was crucial to maintaining those jobs and that she supported internal government oversight of the loan program.

Roque Planas contributed to the reporting.