Paycheck Protection Program – who doesn’t love doling out taxpayer money?

11 Jul

Dave Howell opened a can of worms with his post about the Paycheck Protection Program. I had heard about this program on the news, but did not realize how much money they were talking about, or who it would be going to, or how.

Dave sent me the spread sheet with all the names, amounts, and lenders, and wow, that was interesting. You can see the spreadsheet – the link is here at Dave’s blog, Chico Taxes. 

Who’s Going to Pay For This?

The first line on the spreadsheet is “$5 – $10 million”  for Sierra Nevada Brewery restaurant. And here’s the stinker – Sierra Nevada founder Ken Grossman is taking it through Golden Valley Bank, a bank he co-founded here in Chico.

Grossman’s bank is lending millions out to local businesses. “How nice!” you say? I don’t think so. I found this article from Business Insider.

https://www.businessinsider.com/banks-could-pick-up-24-billion-ppp-processing-fees-2020-7

July 9 –   “More than 4,000 lending institutions that process loans through the Paycheck Protection Program (PPP) are in position to split between $14.3 billion and $24.6 billion in processing fees for those loans, per analysis of SBA data cited by The Wall Street Journal. That includes a total of between $1.5 billion and $2.6 billion that the two largest US banks and the program’s biggest lenders, JPMorgan Chase and Bank of America (BofA), are set to split.”

Wow, Der Beer Man is going to make out like a bandit – doubling ending the system, getting free money, and fees to dole it out! 

“The fees banks earn for disbursing PPP loans depend on the size of each loan: 5% for loans below $350,000, 3% for loans between $350,000 and $2 million, and 1% for loans above $2 million. On top of those processing fees, banks that disbursed PPP loans will also earn 1% in interest on PPP loans that aren’t forgiven.”

For example, $15,000 for a $1.5 million loan.  Financed and secured with taxpayer money. The Wall Street Journal claim some businesses “will use the net proceeds of fees … to support small businesses and the communities and nonprofits we serve,” but that is not required. 

Apparently the feds are trying to encourage banks of all sizes to get in on the party. According to Abrigo,  “Lenders that are not already SBA 7(a) lenders, the rule said, ‘will be automatically qualified…'”  

http://www.abrigo.com/blog/2020/03/28/how-lenders-prepare-for-sba-7a-paycheckprotection/#

“The SBA Paycheck Protection Plan provides loans of up to $10 million that are 100% guaranteed by the SBA in order to encourage employers to retain employees or bring laid off workers back on the payroll. They are unsecured loans due in 2 years with a fixed interest rate of 1% (initially, the SBA and Treasury said they would be 0.5%, but raised the rates on April 2). They require no collateral or personal guarantees, and no upfront borrower fee payable to the SBA. Another major difference from the regular 7(a) program is that borrowers don’t have to show that they cannot obtain credit elsewhere.”

Wow, I don’t know about you, but this whole thing reminds me of the mortgage banking feeding frenzy of the early 2000’s – no collateral, no personal guarantees, and no upfront borrower fee? 

As you may know, it’s a lot easier to dole out money that’s not yours. Especially when you are doling some of it out to yourself. 

8 Responses to “Paycheck Protection Program – who doesn’t love doling out taxpayer money?”

  1. Scott Rushing July 11, 2020 at 2:33 pm #

    another good catch Juanita

    The public/taxpayer gets all the risk and no return on their money, the private businesses with political buddies get the $$$, a sweet deal for the few on top of the financial ladder.

    On Sat, Jul 11, 2020 at 1:58 PM Chico Taxpayers Association wrote:

    > Juanita Sumner posted: “Dave Howell opened a can of worms with his post > about the Paycheck Protection Program. I had heard about this program on > the news, but did not realize how much money they were talking about, or > who it would be going to, or how. Dave sent me the spread” >

    • Juanita Sumner July 12, 2020 at 5:35 am #

      That’s right, how sweeeeet it is! This is how Tammany Hall worked.

  2. Dave July 11, 2020 at 3:17 pm #

    I am going to make an updated version of the spreadsheet, probably in a week or two. There are 425 “loans” in the spreadsheet, but I left out Corning and Los Molinos. Adding those in would bring it up to 443. I will add those. Also, the PPP is still handing out money so those numbers will probably go up. I will also add the descriptions to the NAICS codes if I get a chance.

    Also, keep in mind the “loans” are for $150,000 and over. The file I worked with had over 661,000 loans but it doesn’t include loans under $150,000. I am guessing if you factor those in there’s probably at least a couple million “loans.” I put loans in quotes because if the businesses spend the money on qualifying expenses the loans can be forgiven.

    Regarding Grossman, according to his wikipedia page he’s a billionaire. And you’re right about the banks getting money from this program to hand out the “loans.” This guy is getting money for loaning money to his own company that he doesn’t even have to pay back.

    You would think a billionaire who owns a wildly successful company would have funds to weather a storm instead of taking money from the taxpayers. But as George Carlin said, “It’s one big club and you ain’t in it.” But you get to pay for the club. We live in a corrupt society.

    • Juanita Sumner July 12, 2020 at 5:37 am #

      Ken Grossman also sits on various local boards, has way too much influence over local politicians.

  3. bob July 11, 2020 at 3:22 pm #

    This stuff is dynamite. Where is the local media? You would think they would be all over this.

  4. Jim July 12, 2020 at 5:11 am #

    Of course, the so called “Paycheck Protection Program” was another Republican scam. Most of the money went to billionaires, large corporations and mega churches. Robin Hood in reverse. Take money from the middle class and give to the rich. Half a Trillion Dollars is unaccounted for.

    • Juanita Sumner July 12, 2020 at 5:42 am #

      Wow, I can’t even grasp “a trillion”, I’ve never even seen it – is this right – 1,000,000,000,000 ?

      I don’t know if it’s a Republican scam, there’s plenty of Democrats on the list. And Grossman, although I don’t know his registration, is pretty friendly with local liberals like Ann Schwab. He sat on Schwab’s Sustainability Task Force, and got plenty of favors in exchange for his support. I think he’s in pretty deep with Chico Democrats, I’ll have to start checking the campaign reports.

      Like Dave said, it’s not so much about politics as it is about rich people, a club that protects itself.

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