Large Corporations Pillage Paycheck Protection Program Funds Meant To Help Small Businesses Survive The Coronavirus Crisis.

The Coronavirus pandemic has ravaged our economy, shutting down millions of businesses and leaving millions of Americans out of work, with no replacement for the income thats being taken away from them. In response, the government has passed legislation to offer relief to small business in the form of loans in the midst of this global pandemic, but more than 90% of small business have been unable to access these loans.

According to reporting by AP, small businesses have been shut out of receiving loans, while large corporations are receiving $300M in small-business loans:

“Companies with thousands of employees, past penalties from government investigations and risks of financial failure even before the coronavirus walloped the economy were among those receiving millions of dollars from a relief fund that Congress created to help small businesses through the crisis.”

These large corporations are abusing their power due to the fact that they already have access to capital markets and Federal Reserve programs that make it easier for them to access government assistance, while small businesses do not. As a result, small businesses have effectively been blocked out by large corporations from receiving the loans meant to help them during the worst economic crisis since the Great Depression.

The small-business owners claim that some of the country’s largest banks have unfairly favored applications from their wealthiest clients for government stimulus programs, rather than prioritizing small businesses who are getting hit the hardest by this pandemic & the ensuing economic collapse.

According to a statement by the Stalwart Law Group, which filed the lawsuits last Sunday in Federal court in Los Angeles, Wells Fargo, Bank of America, JPMorgan Chase and U.S. Bancorp “rigged the loan process to benefit their bottom line,”

The Stalwart statement said that big banks failed to process applications for the loans on a first-come, first-served basis, resulting in 90% of applicants receiving nothing according to the lawsuit. The $349 billion in funds for thePaycheck Protection Program, part of the $2 trillion Coronavirus Aid, Relief and Economic Security Act, ran out of funds less than 14 days after it was launched. But the funding for assistance to large corporations seems to have no end in sight.

To make matters worse, the latest $300 billion addition to the fund passed by the Senate on April 21, 2020, also fell far short of what’s needed to help small businesses survive this pandemic. This bandaid legislation only lasted two days, and it should’ve been closer to $1 trillion if it was actually meant to meet the demands of this crisis.

Hundreds of thousands of applications for assistance are already waiting for a response, but the new law does nothing to fix aspects of the program that allowed large companies to block out small businesses from obtaining tens of millions of dollars in loans meant to help them survive this pandemic.

The new bill also doesn’t include anymore funds to replace income lost beyond the one-time payment of $1,200 and unemployment benefits in the previous bill. As a result of these and other shortcomings, legislators and the President are talking about passing yet another coronavirus relief bill. But don’t expect any bones to be thrown to poor & working class Americans who are most in need of assistance.

Business owners of color are particularly vulnerable to discrimination in the lending system. According to a report from the Center for Responsible Lending,  a large majority of minority owned businesses, including 95 percent of Black business owners, have little chance of receiving a Paycheck Protection Program (PPP) loan through a bank or credit union without existing relationships to 7(a) lenders.

Small businesses are demanding that any new funding must come directly to them in the form of subsidies, rather than loans. They’re also demanding that the relief program must prioritize those who were left out of the first two rounds of loans due to the fact that the program favored larger corporations.