If you follow me on Twitter, you’d know that our law firm didn’t take out a Paycheck Protection Program (PPP) loan. But if we had, you might soon know the details – down to how much money we had received: Treasury and the Small Business Administration (SBA) have agreed with the bipartisan leaders of the U.S. Senate Small Business Committee to make additional data from PPP loans public.
Treasury Secretary Steven T. Mnuchin says that the disclosure “will strike the appropriate balance of providing public transparency, while protecting the payroll and personal income information of small businesses, sole proprietors, and independent contractors.”
Under the agreement, the SBA will disclose the names of businesses who received PPP loans of $150,000 or more. The specific amount of the loans would not be disclosed, but the loan amount ranges would be, as follows:
- $150,000-350,000
- $350,000-1 million
- $1-2 million
- $2-5 million
- $5-10 million
The information made public would also include business addresses, business type, demographic data, and jobs supported by the business.
Also to be made public? The North American Industry Classification System (NAICS) number used to classify the business. Federal statistical agencies have used NAICS numbers since 1997 for collecting, analyzing, and publishing statistical data. NAICS Codes aren’t handed out by the government but are self-assigned based on a business’s primary activity (typically the activity that generates the most revenue).
According to Treasury, businesses that received $150,000 or more account for nearly 75% of the loan dollars approved. However, almost nine in ten borrowers took out loans totaling less than $150,000. That means that most businesses that took out loans won’t be identified by name. Those totals will be released, aggregated by zip code, by industry, by business type, and by various demographic categories.
Some PPP data has already been made public by loan size, state, and lender. You can see that information here (downloads as a PDF).
These new disclosures mark a change in policy. Earlier, Mnuchin told Congress that the names of businesses who took out PPP loans would not be made public. However, members of Congress – on both sides of the aisle – were unhappy with that answer, noting, among other things, that there was no additional oversight of the program.
Under the PPP, more than 4 million businesses have received more than $500 billion so far. The secrecy surrounding the program (and which businesses received money) has roiled many in Congress, as well as many small businesses who were left out of funding initially (a second round was eventually made available). That’s why the bipartisan agreement insisted on disclosure.
But now that the cat’s soon to be out of the bag, there are concerns that making this information public might create problems for individual businesses named in the disclosures. Some businesses and tax professionals have noted that businesses didn’t expect the loan information to be made public, citing a confusingly worded Freedom of Information Act (FOIA) section on the PPP borrower application (downloads as a PDF) which notes both that “individual borrowers are not identified in the statistics” and that “other information such as the names of the borrowers (and their officers, directors, stockholders or partners)” would be made available.
However, the SBA already has pretty generous FOIA terms listed on its website which indicate that loan-related information that could be released includes, among other things:
- Names and commercial street and email addresses of recipients of approved loans, SBIC licenses, Certificates of Competency, lease guarantees, surety bond guarantees and requests for counseling.
- Names of officers, directors, stockholders or partners of recipient firms.
- Kinds and amounts of loans, loan terms, interest rates (except on home disaster loans), maturity dates, general purpose, etc.
Many advisors had already told their clients to assume that the information could be made public at any time. That doesn’t make some small businesses feel any better. There have already been discussions about the practical considerations of these disclosures – especially the discomfort of having your finances in the public eye and whether there might be backlash or other consequences.
However, SBA Administrator Jovita Carranza said about the disclosures, “We value transparency and our fiduciary responsibility to ensure American taxpayer funds are used appropriately. This responsibility goes together with the steps we are now taking to provide needed public information while protecting entrepreneurs’ personally identifiable information, such as a home address associated with their business loan.”
