Did PPP Loans Really Save 900,000 Colorado Jobs During Coronavirus Shutdown?

Treasury Secretary Steven Mnuchin recently suggested that loans under the program should be canceled regardless of how the funds were used. This would complicate efforts to monitor the effectiveness of the program.

Kevin J. Beaty / Denverite
Inside a tent that will be used for expanded seating at Steuben’s Uptown. July 17, 2020.

In response to questions from CPR News about how the Colorado SBA calculates its employment figures, the district office said that “the data comes from summary information captured from PPP requests, as provided by customers and foreclosures by lenders “.

“Approximately 900,000 jobs have been reported, which was documented in the June 30 SBA report summarizing the impact of the PPP on Colorado small businesses and organizations,” a representative from the Colorado district office said in a press release sent by email.

Business owners are also confused

In addition to the confusion over how jobs are counted, there are questions about the overall reliability of the data, with multiple reports of inaccuracies across the country and no clear accountability for the erroneous data.

For example, thousands of businesses nationwide, including 1,377 in Colorado, appear in the data not to report any jobs related to their loans. This could be due to clerical errors or the fact that companies were not required to complete all fields on the application form.

Denver-based energy company ARB Midstream has been recorded in government data as having taken out a loan between $ 2-5 million and not supporting any jobs. Rogan McGillis, chief financial officer of ARB, said he was not sure how the information was reported or why it shows no use, but that it is inaccurate.

“We currently employ over 100 staff in three states and the funds received have been used for payroll related costs,” McGillis said in an emailed statement.

In this case, the official estimates of the number of jobs saved could be underestimated. But overall, estimates of how many jobs will be saved are likely to be exaggerated due to poor data quality, according to Hunter Railey, Colorado director of the Small Business Majority, a small business advocacy group.

Additionally, much of the money appeared to have gone to businesses that had easy access to bankers and accountants, as opposed to businesses that needed it the most, he said.

“As far as we know, maybe not everything, but a good chunk of that money frankly went to people who didn’t need it, weren’t affected, and really didn’t use… segments of the population that would be most at risk of transmitting the virus, ”according to Railey.

Jobs in restaurants and hotels are particularly hard to count

Even when businesses start submitting loan cancellation requests, there won’t always be a straightforward answer.

According to Josh Wolkon, who owns four restaurants in the Denver subway, accounting for jobs in industries like the hospitality industry that still face significant disruption and business closures is particularly complicated. It’s virtually impossible to keep all of your employees when your establishment is shut down by government mandate, he said.

Kevin J. Beaty / Denverite
Jeanna Gray and Jimmy Fierro kiss at the bar at Steuben’s Uptown. July 17, 2020.

Wolkon, who received PPP loans early in the program, has maintained a vibrant take-out business at Steuben’s in upscale Denver neighborhoods throughout the pandemic. It now has two locations with outdoor patios open for limited in-person meals.

But its staff has grown from 300 before the pandemic to 80. The loan program has evolved to be more flexible, but it’s still unclear how the forgiveness process will play out, Wolkon said.

“It’s a constant analysis… with our CFO, our banker and our accountants, trying to find that balance between using that money, doing it right, doing it the way the guidelines are written, interpreting the guidelines correctly, and hoping. that we did everything right. to obtain forgiveness, ”he said.

Disclaimer: Colorado Public Radio requested and received help from the Paycheck Protection Program during the coronavirus pandemic.

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