Between creation of the Paycheck Protection Program (PPP) by Congress in March 2020 and passage of the American Rescue Plan in March 2021, as many as 223 forgivable loans totaling $36.1 million were provided to labor unions and related organizations that were statutorily ineligible for the funds. Teachers’ unions, government employees’ unions and AFL-CIO advocacy organizations are among the most prominent beneficiaries of the relief funds.
This breakdown in the PPP, administered by the Small Business Administration (SBA), has not been publicly documented previously. The ineligible loans diverted resources away from the purpose of the PPP, namely helping businesses keep employees on payroll. Further, given that union revenue derives primarily from dues deducted from members’ paychecks, direct support to unions was unnecessary; to the extent the PPP loans to businesses allowed union employees to keep working, it also allowed unions to continue collecting dues from their paychecks.
Disconcertingly, the apparently inappropriate PPP loans may have been granted due to fraudulent loan applications or other questionable conduct by applicants or the private lenders operating under the SBA’s delegated authority to approve loan applications. Appropriate federal authorities, including at least the SBA and the Department of Justice, should investigate the matter further and take appropriate actions to recover funds improperly paid and prosecute any fraudulent activity committed.
Update 3/28/2022: This report has been edited since publication to account for the removal of three loans — Nos. 9859357107, 2966517405 and 3887708406 — that were initially identified as potentially inappropriate on the basis of the recipients’ tax-exempt status but were subsequently determined to have been made to eligible 501(c)(3) organizations.