NEW YORK (April 19, 2020) — Amid reports that massive restaurant chains and businesses that continue to operate received funds intended for small businesses shuttered by the coronavirus pandemic, the National Urban League today demanded the next legislative package include specific funding pools for legitimate small businesses truly threatened by the crisis.
“Struggling small businesses in the nation’s hardest-hit regions have not received a dime from the Paycheck Protection Program, intended for businesses with fewer than 500 employees, while hundreds of millions of dollars have gone to corporations that employ thousands, like Ruth’s Hospitality Group and Potbelly Corporation,” National Urban League President and CEO Marc H. Morial said. “Executives whose annual compensation is in the multi-millions skirted the intent of the program by applying through subsidiaries, depriving legitimate small businesses of the aid they desperately need to survive.”
The National Urban League has been advocating in Congress for the next round of funding for the PPP, which could be approved in a matter of days, to be reserved for legitimate small businesses that qualify under the Small Business Administration’s gross sales guidelines, and that minority-owned, rural, remote and unbanked small businesses be given priority.
Because the guidance for eligibility for PPP loans does not take into account the small business size standard base on gross sales, large chains like Ruth’s and Potbelly, were eligible based on the number of employees who work at individual locations, rather than the total workforce.
Further, much of the funding has gone to businesses that continue to operate, like construction firms, that have been able to retain most of their workforce. Because funding was based on the size of a company’s workforce, the worst-hit businesses that had already laid off workers were at a disadvantage.
“The lifeblood of the communities we serve are the Main Street mom-and-pop establishments like barbers and beauty shops, neighborhood cafes and specialty services that may employ only a few dozen or fewer workers,” Morial said. “Those are the businesses we’re fighting to protect, and we expect Congress to protect them as well.”