Dan Haar: PPP loan list to CT companies shows a messy bailout
The list of PPP loan recipients, that is, the Paycheck Protection Program, landed in our inboxes Monday afternoon from the good people at the Small Business Administration. To say it’s enlightening is like saying Hamilton the Broadway show is entertaining.
Like the landmark production, the PPP list — $6.7 billion in forgivable loans for more than 60,000 organizations in Connecticut — contains pretty much the full, messy picture of the U.S. economy. Is it fair? Maybe yes, maybe no.
It features companies you know, like Modern Apizza and Frank Pepe’s pizza (nine locations, $150,000 to $350,000 each and no, the New Haven location was not on the list); machine shops you’ve never heard of; an armload of private schools including The Foote School in New Haven ($1 million to $2 million), a few of the biggest law firms, Catholic schools in several Connecticut cities, the vast range of nonprofits including Planned Parenthood ($5 million to $10 million) and on and on.
It’s supposed to be for small businesses, as the giant companies have their own coronavirus bailout. But “small business” means something different to the federal government than it does to you and me. Loosely, anyone with 500 or fewer employees is on the gravy train, down to sole proprietorships like your neighbor Marge who makes wooden toys in the garage.
So that means the troubled FuelCell Energy Inc., publicly traded with upwards of 300 jobs in Danbury and Torrington, was able to haul in between $5 million and the maximum PPP loan, $10 million. It was among 50 Connecticut borrowers listed as receiving loans of at least $5 million.
Click here for a searchable database of 3,670 borrowers that received at least $350,000.
The database only gives us a range, like those forms candidates sign that give their net worth in a range that lets you know what country clubs they can afford to join but not much else. Hat tip to my colleague Paul Schott for helping pull it together.
At least three Connecticut newspaper publishers are on the list but not this one. We’re part of a larger corporation.
Before we get further into the salacious details, let’s think about what this list means. Aside from a catalog of the state’s employers, large to midsize, it points us to two big ideas.
First, any remaining pretense that the United States operates under a free market system is just seventh-grade silly talk. This massive bailout — $521 billion for the PPP and still counting until Aug. 8 since Congress couldn’t bear to shut off the spigot on June 30 as planned — is part of a broader federal backstop. In all, the coronavirus stimulus will total maybe $3 trillion or more by the time the last state has coronavirus under control.
Yes, it’s an extraordinary crisis seemingly unrelated to the natural order of business cycles. But we’ve had bailouts before, notably in 2009, and what we’re seeing, like it or not, whether you’re a Democrat, Republican, libertarian or none of the above, is that the government is your partner in the economy. We already know states and the Feds spend more than half the dough on the nation’s $3.3 trillion health bill, and we know about the $700 billion yearly military budget that keeps Connecticut off the ground (and under the sea).
Now we see more plainly than ever that the economy can’t even begin to operate without serious government intervention, not just research dollars, not just education, not just as a payer for goods and services, but right down to the bottom line of literally millions of companies when it matters most.
Think about that the next time you hear someone — maybe at one of these 4 million-plus companies on the national PPP list — cry out that government needs to get off our backs.
No fair bailouts
Manufacturers weren’t shut down but the list includes many, including Tower Laboratories LTD in Essex, maker of bromide tablets, owned by state Sen. Norm Needleman — $2 million to $5 million, with no figure given for number of jobs saved.
It’s a war, and you know what they say about ideology and religion in a foxhole.
Just a look at the Connecticut newspapers that participated in the PPP. They include Journal Publishing Co. of Manchester, publisher of the Journal-Inquirer ($350,000 to $1 million); The Day Publishing Co. in New London ($1 million to $2 million); and the publisher of the Waterbury Republican-American ($1 million to $2 million). They represent a wide range of political opinions.
That’s the beauty of the PPP — an equal opportunity bailout. And that brings us to the second big idea: There is no fair way to shut down an $18 trillion economy and make all the players whole. The list includes some companies, and individual proprietors, that were teetering, not really making a living at all. Now they can pay off their credit cards.
Some of them — at least two that I know personally — are also collecting unemployment, apparently against the rules.
And the list includes companies that were humming along nicely, revenues cut to almost nothing by COVID-19. Their PPP loans won’t begin to cover their losses.
And it includes publicly traded companies, notably FuelCell in Connecticut, that have access to money on the public debt and equity markets. FuelCell just finished a major recapitalization last year to save itself, and now it’s on the PPP list.
Unfair? Tell that to the 258 people whose jobs are saved by the federal program — not ones and twos, but an important industry in hard-hit Torrington.
The point is, there’s no such thing as fair. The economy is a roiling stew and if the bloody goat’s head of coronavirus lands in the pot, there’s no going back.
Oh, we can try. This from Sen. Richard Blumenthal, who spent years as Connecticut’s attorney general, going after business wrongs.
“This data — long-overdue — raises increasingly serious questions about possible misallocation of PPP funds. I’ll be closely scrutinizing the list and seeking investigation of any misguided decisions, favoritism or wrongdoing. Small businesses in desperate need of funding simply had less access than larger companies. I’ll be asking for more information from U.S. Treasury officials to answer tough questions and assure all Connecticut businesses, especially smaller ones, are treated fairly. We must learn from the mistakes.”
Eric Gjede, vice president of public policy at the Connecticut Business and Industry Association, told Schott Monday he viewed the PPP as helping companies stay afloat.
“I think companies were desperate to ensure they were taking care of their people as best as they could. I don’t begrudge those companies for looking for loans to help take care of their employees. That’s what we want at the end of the day - less people filing for unemployment and more businesses trying to keep these folks on through any means necessary.”
Any means necessary. Yes, there’s some wrongdoing in any half-trillion-dollar bailout and we should root it out but the point is there was no way to do that on the fly. The bailout happened too fast in too many places.
In all, The SBA database shows 8,595 companies that received forgivable loans of at least $150,000, up to $10 million under the Paycheck Protection Program, for a total of nearly $5 billion — an average of about $570,000.
Another 52,350 companies, not listed by name, received $1.8 billion, or an average of $34,000 each. Two thousand of them collected less than $2,000 in the program
On the list of large borrowers, there are 15 firms named Shoreline, all but one in a shoreline town; and 12 named Nutmeg.
Some of the state’s largest law firms are included, such as Day Pitney, Shipman & Goodwin and Robinson & Cole, all of which fetched between $5 million and $10 million. Also on the list for largest loans were two steel companies, speaking of old American industry.
Another 321 collected between $2 million and $5 million and 699 inked deals for $1 million to $2 million, including many of those private schools.
Messy as it is, Connecticut seems to be flousishing: With its $6.7 billion load, the state pulled in about $1 billion more than its share of the federal money, based on population.
Staff Writer Paul Schott contributed reporting