It may have only taken a few court fights and a lobbying campaign on Capitol Hill, but payday loan companies have managed to get a cut to the nearly $700 billion relief fund set aside by Washington. to help small businesses across the country deal with the coronavirus outbreak.
Records of people who received loans under the Paycheck Protection Program released last week show that 35 companies that provide payday loans, car title loans and other borrowing options to High interest and low dollar yielded millions of dollars in federal coronavirus aid, up from $9 billion. to $23 billion, in total. The Small Business Administration, which administers the PPP, does not publish exact totals for each loan award.
The group of companies that have benefited include CashCall, Inc., a California-based company that was sued in 2013 by the Consumer Financial Protection Bureau for charging borrowers money they did not owe and was hit with a $100,000 fine in 2017 when the District of Columbia’s Attorney General sued for charging interest rates of up to 169% on the loans.
None of that mattered in April, when the company received a loan worth $350,000 to $1 million.
Other recipients of small business aid include Montana Capital Loans, another California-based company that the state government’s Enterprise Oversight Commissioner says is set to lose its lending license in 2017 for violating rules ; and Hutcheson Enterprises, an Alabama-based company that operates more than 300 loan offices in nine states.
Hutcheson received between $2 million and $5 million in PPP loans from the federal government. Company chief Roy Hutcheson told The Daily Beast on Wednesday that if he doesn’t get help he will have to lay off a third of the company’s workforce. “We’re like any other business, we have employees and the person down the street who needs the money — they’re no different than me,” Hutcheson said. “I feel like we had as much right to get a loan as anyone else.”
But there are many who disagree with that point, from congressional lawmakers to consumer advocates, who find it outrageous that an industry that has become synonymous with profiting from low-income Americans has been granted access to business loans. emergency guaranteed by the government.
“It goes without saying that predatory lenders who charge working Americans up to 400% for payday loans should not receive taxpayer subsidies or near-zero interest rate loans,” said Kyle Herrig, chairman of Accountable.US, a liberal watchdog group. “Congress needs to establish a fairer, more transparent system to get relief for real small businesses,” Herrig said, “not predatory moneylenders looking for handouts.”
“It is outrageous that payday lenders have access to these critical funds,” said Sen. Sherrod Brown (D-OH), a senior member of the Senate Banking Committee who signed a May 6 letter with fellow senators. urging the SBA to deny access to payday lenders. PPP funds. “Taxpayers’ money shouldn’t be going to payday lenders who rip off working families and trap consumers in cycles of debt.”
At one point, at least, those responsible for the business rescue program seemed to agree. In April, a bipartisan group of pro-payday lender lawmakers advocated with the Treasury Department to open the loan program to consumer lenders; the same month, the SBA denied a payday lender called Payday Loan LLC a forgivable loan worth $644,000, on the grounds that giving this type of lender access to small business relief funds n was not in the “public interest”.
The company then filed a lawsuit against SBA in federal court over the denial of the PPP loan. It’s unclear what changed, but on May 11, Payday Loan LLC withdrew its lawsuit after it said it received a “firm offer” for a PPP loan, and federal records show it received one from worth $350,000 to $1 million on May 3. SBA did not respond to a request for comment from The Daily Beast regarding its specific PPP guidelines for payday lenders and other high-interest lenders.
When it passed the CARES Act that implemented the PPP in late March, Congress was in a rush to provide much-needed relief to small businesses suddenly staring at a stalled economy and fearing they might not survive. The program has undoubtedly helped hundreds of thousands of companies keep their employees on the payroll, but millions of dollars have also been recouped by well-resourced entities such as publicly traded fast food chains. , private equity-backed companies, the Church of Scientology, and organizations tied to Trumpworld luminaries like Jared Kushner.
Many of those businesses that received loans repaid them after facing public scrutiny, which to date payday lenders have not.
Lawmakers are frustrated that the program’s implementation, while successful in many ways, has nonetheless frozen some small businesses – many of whom have waited months for a loan – while handing a slice of the pie to businesses seen as among the most dishonest players in the American economy.
‘What we need now is what we needed four months ago when this crisis started: targeted support to our high street small businesses to help keep people in their jobs and their doors open,” said Rep. Andy Kim (D-NJ), a member of the House Small Business Committee and the special panel established by House to oversee the coronavirus response. “We need to make sure that future action is focused on exactly that and that there’s enough transparency to hold the SBA accountable when money goes where it shouldn’t.”
Some $130 billion, which was earmarked after the rapid depletion of PPP funds in April, remains in the program’s coffers. Lawmakers have talked about establishing stricter guidelines around which organizations could be eligible for relief now, although no clear plan is on the table. The office of Sen. Marco Rubio (R-FL), chairman of the Senate Small Business Committee, did not respond to questions about whether payday lenders’ access to PPP meant changes to the program were needed.
So far, the payday loan industry has clearly been successful in making its case to the Trump administration and Congress to get taxpayers’ money out of the PPP pot. The House members’ letter to the Treasury on behalf of the industry came a month after two major payday loan companies lobbied lawmakers over its interests in the program, as reported by The Daily Beast in may.
Some industry figures have also spoken openly about the Trump administration’s benevolence to the sector and tied their financial support to the president in hopes their interests would be heard. In 2019, the The Washington Post reported on an industry webinar in which attendees talked about the importance of donating to the Trump campaign and bragged that their contributions were able to secure them an audience in the White House. One of the webinar attendees, Speedee Cash, received a PPP loan worth $150,000 to $300,000.