Citing Freedom Foundation research, the GOP leaders of four committees in the U.S. House of Representatives last week sent a letter to the head of the Small Business Administration (SBA) seeking information about how labor unions were able to receive forgivable loans through the Paycheck Protection Program (PPP) for which they were ineligible.
In a February report, the Freedom Foundation documented that, between March 2020 and March 2021, more than 200 labor unions and related nonprofit entities received in excess of $36 million through the SBA-administered PPP loans despite being ineligible on the basis of their tax-exempt status.
During this period, PPP loans — intended to help keep small business afloat during the government-mandated COVID lockdowns — were generally only available to 501(c)(3) nonprofits.
Labor unions, as 501(c)(5) nonprofits, did not qualify.
In a joint statement, Rep. Virginia Foxx (R-NC), ranking member of the Education and Labor Committee; Rep. Blaine Luetkemeyer (R-Mo.), ranking member of the Small Business Committee; Rep. Rick Allen (R-Ga.), ranking member of the Health, Employment, Labor and Pensions Subcommittee; and, Rep. Beth Van Duyne (R-Texas), ranking member of the Oversight, Investigations and Regulations Subcommittee expressed concern over the Freedom Foundation’s findings and called on the SBA to investigate further:
“It is concerning that PPP funds were distributed to entities other than small businesses and designated non-profit organizations. The illegal entry of at least 226 labor, teachers, and government unions into the Paycheck Protection Program demands an investigation. Ensuring American tax dollars are used responsibly and correctly is essential in our duty to the American people and our small businesses. We hope the SBA will be able to shed some light on this important issue.”
Their letter to SBA administrator Isabel Casillas Guzman demands additional information about PPP loans to 501(c)(5) labor organizations by April 20.
Given the likelihood of finding fraud in the applications for forgivable PPP loans, the Freedom Foundation has also submitted the results of its research to the SBA Inspector General and to the U.S. Department of Justice’s National Center for Disaster Fraud.