DENVER — When the Trump administration released the businesses who were awarded federal loans from the Paycheck Protection Program (PPP), Denver7’s Rebound Team followed the money to see which companies benefited from the program in Colorado.
Contact7 Investigates found exclusive private schools, and publicly funded charter schools got millions in the federal bailout money. At least 45 faith-based organizations in Colorado received PPP loans.
Federal government struggles with oversight
As the COVID-19 pandemic closed businesses across the country, the federal government threw a lifeline to struggling small business by way of PPP loans.
Government data released this week showed 4.9 million PPP loans, worth $521 billion were approved.
The program was created to keep businesses alive and Americans employed, but in order to inject small businesses with this money quickly, the government had to take companies at their word.
Here’s how the program is supposed to work
To qualify for a forgivable PPP loan, companies had to have 500 employees or less and had to sign a self-certification stating it suffered economic hardships due to COVID-19 that required the loan.
A lending institution or bank is responsible for making the loan, and then the Small Business Administration (SBA) guarantees it.
Under the program, companies can borrow up to two-and-a-half times their monthly payroll.
For the loan to be forgiven, businesses must prove they spent at least 60% of the loan on payroll and employee benefit costs. The other 40% can be spent on mortgage interest payments, rents or utilities.
Companies who fail to do so will be required to pay the loan back at a 1 percent interest rate over a two- or five-year period.
U.S. Treasury Secretary Steven Mnuchin has said the government will perform a full audit on any company taking out more than $2 million from the small business loan program.
