The federal government said a St. Petersburg food company got up to a $10 million loan for coronavirus aid. The company, which has 15 employees, actually got less than $300,000.
The government said a small Tampa trucking business got as much as $1 million. They actually got about $120,000.
A Tampa health care staffing and consulting firm withdrew its loan application after determining it was ineligible. The government still said it got up to $10 million.
The U.S. Department of the Treasury and Small Business Administration this week released a trove of data about 4.9 million companies that have received more than $521 billion in forgivable loans as part of a COVID-19 relief package. It was the clearest picture yet of how the government’s coronavirus aid money is being spent.
Unfortunately, for some companies, the data wasn’t clear at all. The list contained inaccuracies about the amount of money received, the number of employees affected, even misspellings. And it’s already causing problems.
“It has impacted us negatively,” said Matt Mills, vice president of McLain Foods in St. Petersburg, which was inaccurately listed as receiving a loan of $5 million to $10 million, the highest bracket of aid. “Customers, friends, vendors now think we are bigger than what we are, and think we have more money than what we do.”
Mills shared a copy of McLain’s promissory note, which showed the company should have been listed in the $150,000 to $350,000 bracket. He said they’re working with their lender to figure out what happened.
“Contacting the government is a black hole, and it’s not going to help anything,” he said. “We know the amount of money we got. We know we can provide that to anyone who asks. It was a government error. I don’t think it was fraudulent, per se, but I think the government needs to be more careful with information like that.”
A half-dozen emails to communications officials with the Treasury and regional and national branches of the Small Business Administration, inquiring about both specific errors and what businesses should do if they find mistakes, were not returned this week.
One Tampa CEO, whose company was mistakenly listed as receiving up to $10 million, did manage to relay a complaint to the SBA, but came away with no answers.
“They had no response,” said Christian Brown, the CEO of Harmony Healthcare. “They said, basically, ‘Thank you very much.‘”
The firm had applied for a loan before realizing it had too many employees to qualify. It withdrew the application and never received anything. Brown said the company has avoided layoffs partly because he and other executives have taken pay cuts. When the incorrect loan info came out, he worried employees and financial partners might think they’d lied about their cash flow.
“I spent a good portion of my day dealing with this,” Brown said. “It’s really sad, because the government’s inefficiency or ineffectiveness created somewhat of a rancor and made everybody look bad, when that’s not the case.”
Trucking company Moraima Tampa requested up to $520,000, said owner Maikel Duarte, and in fact was listed in the $350,000 to $1 million loan category. But it only received about $120,000, leaving Duarte wondering if more money should be coming.
In some cases, the errors were not about money. The Treasury listed each recipient’s number of “jobs retained” as a result of the loans, which are designed to help keep paying employees’ salaries. In many cases, that category was left blank.
Dawn Talty, accounting administrator for Ivy Group Consultants in St. Petersburg, was surprised to see a zero in her company’s “jobs retained” field, since their loan, valued at $150,000 to $350,000, allowed them to keep all six employees. She said the loan forgiveness application she’s in the process of filling out now asks about employee retention, and that form isn’t due until the end of October. She wondered if companies that have yet to send in that application defaulted to showing no employees listed in the database.
The application process takes place on a government system that’s “a little bit dated,” said Chris Kneer, a senior vice president with Valley Bank, a New Jersey bank with a small business lending operation in Tampa. So he can see how errors might slip through — and how many applicants might not know it.
“The information’s still so fresh, I’m not sure that a lot of customers realize that it’s been publicized, and that people can actually see how much they got,” Kneer said. “I think some folks ended up either changing their amount or not taking the PPP loan, but they’re probably still on the list. There could be some of those people that feel like it’s not being reported correctly.”
Given the size of the loan package, and the speed with which it was deployed, problems may have been inevitable, said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida.
“Any policy will often have unintended consequences, particularly when it’s being rushed and trying to do triage to the economic damage that the shutdown created,” he said. “You lose precision, you lose tracking ability. The data collection and reporting is going to reveal flaws going forward.”
Mills said that even though McLain Foods’s business went south as restaurants tanked during the lockdown, the company never had to lay off employees. He’s discouraged to see a government mistake bring unwanted negative attention on their business, which has since stabilized.
“This program was for small businesses,” he said. “Clerical errors, or whatever happens, affect us. We are in the category that should have been helped by the program. And when the information is not publicly available in the correct way, it hurts the small companies that it’s supposed to be helping.”
Times Staff Writer Sara DiNatale contributed to this report.
Did your business get a Paycheck Protection Program loan through the Small Business Administration? Was the information released by the government inaccurate? Do you know about other problems with PPP loans? Tell us at firstname.lastname@example.org.
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