(The Center Square) – The federal payment protection program established in 2020 to help small businesses and protect the jobs of their workers was finally allowed to include unions, and millions of forgivable loans ended up with them and other organizations.
Eligibility and timing are in question for many, according to a new report of the Freedom Foundation. Nationally, labor organizations received $36.7 million in P3 funds and $1.2 million ended up in the hands of Pennsylvania unions.
“Disturbingly, the apparently inappropriate PPP loans may have been made due to fraudulent loan applications or other questionable behavior by applicants or private lenders operating under the delegated authority of the SBA,” Maxford wrote. Nelsen, author of the report and director of labor policy at the Freedom Foundation. .
PPP eligibility expanded from small businesses and nonprofits in March 2020 to include unions and construction companies by March 2021. But many unions applied for funding before they could legitimately receive largesse.
Teachers’ unions and state and local government employee unions across the country have received funding, although they have not been affected by the kinds of economic shocks that private businesses have experienced.
“It was a complete breakdown of how the program was supposed to work,” Nelsen said.
In Pennsylvania, the following unions have received funding:
IBEW Local 375 ($46,880).
Graphic Communications Union Local 4C ($23,100).
PA AFL-CIO ($267,762).
Teamsters Local #77 ($86,900).
Local 66 AFL-CIO Operations Engineers ($180,100 in 2021).
Local 66 AFL-CIO Operations Engineers ($180,100 in 2020).
IATSE Local 489 ($40,251 in 2021).
IATSE Local 489 ($28,400 in 2020).
The Training and Education Fund ($187,900).
UFCW Local 1776 ($171,822).
Since most unions were not eligible for PPP loans before the law was enacted on March 11, 2021, these were not misclassified documents. They were ineligible for program funds at all during the period in which they applied. Because the documents went through private lenders and not the Small Business Administration, the applications are not publicly available. Thus, it is unclear whether private lenders failed to understand the program’s qualifications or whether unions misrepresented how the funds would be used.
“It has become quite clear in the year since the program’s inception that the SBA did not have appropriate controls in place to ensure funds only went to eligible recipients,” Nelsen said. .
“Loans determined by the loan review process to have been issued to ineligible borrowers will not be forgiven,” SBA Administrator Jovita Carranza wrote after a critical report by the investigator general.
Still, the Freedom Foundation noted that $24.2 million of the $36.7 million in union loans has already been forgiven.