Michael Harrison, owner of Michael’s on Main, was relieved when his restaurant, which closed for two months, in the midst of Covid-19 pandemic– got a federal grant loan.
The money allowed Harrison to keep his business afloat and continue to pay his employees. “We are going ahead and hoping for the best,” he said.
What he didn’t know was that the Small Business Administration (SBA) reported that Michael’s on Main took out a Paycheck Protection Program (PPP) loan of $ 5-10 million. That number was far away.
” Oh my God no. Ours was less than $ 150,000, ”he says.
The idea of a multi-million forgivable loan baffles Harrison.
“They say I had so much money?” It’s completely crazy. I wouldn’t have qualified for that, ”he says.
Many companies across the country have reported similar errors.
It has been difficult for reporters and members of the public browsing SBA data to separate fact from fiction. Here in Santa Cruz County, much of the attention has focused on the reported amounts of loans made to Michael’s on Main and the Calvary Episcopal Church on Center Street.
According to SBA data, the church took out a loan of $ 350,000 to $ 1 million. The actual amount of his loan was less than $ 50,000.
Incorrect numbers have been reported by GT, through The Santa Cruz Local and on Santa Cruz Subreddit. Due to the size of the loans, the SBA should not have released information on either. The SBA was supposed to withhold the names of loan recipients who received less than $ 150,000.
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Harrison says he spent 60% of his loan money on payroll, with the remaining 40% going on other costs, like food, rent, cable, internet, PG&E, and the IT account. of the restaurant. Under federal guidelines, PPP loans will be canceled, as long as businesses spend at least 60% money on the payroll.
Meanwhile, Harrison and his colleagues have spent the past four and a half months navigating the ever-changing nature of what businesses are and are not allowed to do. Currently, Michael’s on Main is open for outdoor dining and guests are required to wear masks.
The errors in the PPP data raised eyebrows across the country. Investigations, including those of the Washington post and Bloomberg– found many irregularities around the PPP program.
For example, the maximum PPP loan for a one-person business was supposed to be $ 20,833. However, Bloomberg find that more than 75,000 loans showing retained employment had larger amounts, including 154 showing one million dollars or more. Many other companies took out loans that seemed too small, given the size of their payroll. These mistakes combined have challenged the numbers of more than one in five companies.
In his analysis, Bloomberg reporters said the anomalies cast doubt on the accuracy of the data for the centerpiece of the $ 2.2 trillion relief program. They added that it is not clear whether the program has actually saved 51.1 million jobs, the number reported by the federal government.