A local member of Congress is questioning the Small Business Administration (SBA) about labor unions that were allegedly able to procure Paycheck Protection Program (PPP) forgivable loans for which they were ineligible.
Rep. Beth Van Duyne (R-Texas), former mayor of Irving, signed a letter addressed to Isabel Casillas Guzman, administrator of the U.S. Small Business Administration, demanding answers to a list of questions for all PPP loans given before March 11, 2021.
“Certainly, it’s going to generate conversations at the SBA, and it’s not something they can ignore entirely,” said Maxford Nelsen, director of labor policy at the Freedom Foundation, a union watchdog.
The letter, signed by Van Duyne and three other members of Congress, includes inquiries regarding how many 501(c)(5)-classified entities received a PPP loan, the total dollar amount of PPP loans made to these entities, and how many of them requested loan forgiveness for a PPP loan.
“PPP loan eligibility was not extended to unions — Section 501(c)(5) entities — until the law was amended nearly a year later,” the April 6 letter states. “This information suggests that 501(c)(5) entities entered the program illegally and put money in the hands of affiliates of large organizations — including the AFL-CIO and the International Brotherhood of Teamsters — which netted more than $3.8 million.”
While 501(3)c organizations (charitable organizations) were eligible for PPP funds, 501(4)c organizations, advocacy groups, chambers of commerce, labor unions, and other types of tax-exempt organizations were not eligible for the first year.
Guzman did not immediately respond to requests for comment.
“These unions were not eligible to receive these funds, so I don’t think the SBA has an easy answer to this problem,” Nelsen told The Dallas Express. “It was an oversight on their part. They didn’t have procedures in place to make sure to check for the tax-exempt status of PPP loan applicants, and it’s hard to say we dropped the ball, but that is what happened at the end of the day.”
The letter cited a Freedom Foundation study called Profiting from the Pandemic that alleges more than 200 labor unions received $37 million in PPP funds.
“It comes down to a matter of integrity versus politics, and unfortunately, politics wins out many times, but we have this out in the open,” Nelsen said in an interview. “It’s very well documented.”
Other members of Congress who signed the letter include Rick W. Allen (R-GA), Blaine Luetkemeyer (R-MO), and Virginia Fox (R-NC).
Van Duyne, the Republican leader of the Oversight, Investigations, and Regulations Subcommittee, did not immediately respond to requests for comment but said in a joint statement online, “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.”
