Hundreds of labor unions that were ineligible for the Paycheck Protection Program (PPP), a $953 billion business loan program through the federal government launched in March 2020, raked in $36.7 million in forgivable loans, according to a new report.
The report by the Freedom Foundation, a free-market think tank, indicated a high level of bureaucratic failure. Nonprofits registered as a 501(c)(3) were only eligible for PPP initially but unions still got funneled resources. As many as 226 forgivable loans were handed out.
“Disconcertingly, the apparently inappropriate PPP loans may have been granted due to fraudulent loan applications or other questionable conduct by applicants or the private lenders operating under the SBA’s delegated authority to approve loan applications,” the report stated, which was first obtained by The Washington Free Beacon. “Appropriate federal authorities, including at least the SBA and the Department of Justice, should investigate the matter further and take appropriate actions to recover funds improperly paid and prosecute any fraudulent activity committed.”
The Small Business Administration (SBA) has waved away $790 billion in small business and nonprofit PPP loans that were tasked with showing how the money would be used to keep staff during COVID-19. People who knowingly submit a false statement to get an SBA loan could face a $250,000 fine and up to five years in prison. Moreover, if the loan is handed out through a federally insured institution, the fine could jump to $1 million and up to 30 years in prison.
There also appears to be some contradiction in the payouts. Unions who received loans were some of the most vocal in support of coronavirus lockdowns.
The Michigan Education Association raked in more than $6.4 million — the highest PPP loan for a union —and supported Michigan Democrat Gov. Gretchen Whitmer in April 2020 when she halted K-12 in-person learning. Similarly, the Memphis-Shelby County Education Association took in more than $107,000 and advocated for lockdowns in March 2020.
In July 2020, Trump administration officials notified SBA that labor unions unjustly received funding through PPP, documents obtained through the Freedom of Information Act reveal. In March 2021, with President Joe Biden now in office, unions were green lit for relief under the American Rescue Plan. Two months later, however, applications closed.
Nearly 80% of the unions who got PPP loans in 2020 were registered as a 501(c)(5), The Freedom Foundation found by tracking down financial records. The other 20% either do not have a public tax status or are ineligible, the Free Beacon noted.
“This breakdown in the PPP, administered by the Small Business Administration (SBA), has not been publicly documented previously,” the report also stated. “The ineligible loans diverted resources away from the purpose of the PPP, namely helping businesses keep employees on payroll.”