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PPP loans were meant to help small businesses save jobs amid the pandemic. So why does official data show thousands of recipients retained zero jobs?

Alexia Elejalde-Ruiz, Chicago Tribune on

Published in Business News

When Quest Food Management Services was approved for a forgivable federal loan to help it preserve jobs during the pandemic, the Lombard, Ill.-based company, which supplies meals to schools throughout the Chicago area, was so grateful that it issued a news release celebrating its ability to keep more than 830 people employed.

But data released this week by the Small Business Administration detailing who received loans from the Paycheck Protection Program did not tie any jobs to Quest's $5.3 million loan. Like tens of thousands of other loan recipients listed in the official government data, the line item for retained jobs at Quest was listed as 0.

In fact, Quest's loan was one of about 20 $5 million to $10 million loans awarded to Illinois companies that listed zero jobs retained.

For a program meant to help small businesses preserve jobs amid government-mandated shutdowns and the general economic upheaval caused by COVID-19, those zeroes can look alarming. In many cases they are also wrong -- raising questions about the reliability of the data showing how billions in taxpayer dollars are being used.

Quest Foods President Nicholas Saccaro said the loan money allowed the company to call back 832 employees who were furloughed when schools shut down, restore the full hours of 250 employees who had been working reduced schedules, and keep paying their health benefits. He said the company reported those numbers in its loan application, but they didn't show up in the government's tally.

"We spent every single penny on employee pay," Saccaro said. "We didn't use a penny of it on anything but payroll."

 

PPP, launched April 3, offered loans up to $10 million to help small businesses maintain payroll, hire back employees and cover rent and other overhead as the nation faced mass layoffs and spiking unemployment. The loan will be forgiven if 60% is used on payroll over the course of 24 weeks. As of June 30, 4.9 million PPP loans worth $521.5 billion had been approved nationwide, including 202,000 worth $22.5 billion in Illinois.

But more than 550,000 recipients, including more than 9,500 in Illinois, were listed in the official government data as having retained zero jobs. Nearly 50,000 of those recipients nationally, and nearly 1,000 in Illinois, received loans of more than $150,000.

While some companies may not plan to use the money for payroll, in which case they must pay it back, several Illinois companies contacted by the Tribune said their PPP loans were used to retain jobs despite the data suggesting otherwise.

Those discrepancies seem to be the result of inconsistent data reporting. Though loan applications asked for the number of employees a company has, and lenders could provide data on jobs retained upon submitting the applications to the government, it was not mandatory that businesses provide that information, said a Small Business Administration spokeswoman. Businesses will be required to provide it in order to receive loan forgiveness because they will have to show their lender how many employees they have and how much they paid them, she said.

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