Paycheck Protection Shaming – Just Stop It

The SBA has released data on the Paycheck Protection Program. 5,461 lenders made 4,885,388 loans totaling $521,483,817,756.

Tax Pro Mobilization

I once did a back of the envelope computation that estimates that roughly a million people in the United States make at least part of their living helping people with tax compliance. A good chunk of them were diverted into being loan consultants as you would know if you followed #TaxTwitter.

Never in the course of accounting history have so many applications been sent in for so many clients for so much money. If we maintain our CPA and EA designations for many decades, some will still say that this was our finest hour.

The Shaming Begins

The other thing that PPP released is the list of 661,205 businesses that received loans in excess of $150,000. There may be an easier way, but I had to do a little futzing to get at the list and the document is not very well formatted. I’m not going to help you with it, because I don’t think you should care.

I was inspired to write this by one of my friend Jeff Kristoff who was overtaken by the PPP frenzy in his post as Director of Tax at Rosen & Associates LLP. Rosen focuses on the dental profession which was particularly hard hit by Covid-19 and generates quite a few paychecks that need protecting. Jeff is quite upset at the shaming:

Today the Treasury released the names of every business that received over a $150,000 PPP loan, which means in a few days the public shaming will begin once people learn how to find the list (no, I’m not telling you) and sort through the data. My request – please don’t shame any of the 661,205 businesses on the list that received these loans. If you have questions about the program, ask me!

I love talking about the program that I spent months dealing with it. There is even money still available if you have a small business and didn’t apply. Even successful business owners likely had to close for many months or saw drops in revenue while still paying rent and other fixed costs. The funds were a lifeline to them, and in the future it will be repaid with taxes.

If you have a problem with the program, contact Congress as they all voted for it. Honestly, any business not on the list is probably too large, too small (under $150k isn’t disclosed), or didn’t apply because the ERC (a credit with recipients that won’t be published) likely provides a greater benefit in their situation.

Again, please don’t shame small businesses just as a person collecting unemployment or receiving a stimulus payment also should never be shamed. Be positive, be happy, and avoid the negativity trap that no doubt will be published in articles/blogs later this week.

From The Midwest

Eric Hjerpe of Hjerpe & Tennison also dove deep into the PPP pool, as I described here:

 My comment would be if they qualified for the program based on the parameters of the program, why shouldn’t they have applied. Do I feel it’s “right” for billionaires to get federal funding? I’ll leave that to the morality police to determine. Everyone knew they planned to disclose details of who got it, so if you feel shamed now, maybe you shouldn’t have applied. 

Others have posted about family members of Congress getting it. I have zero issues with them applying if their businesses needed it. 

The bigger issue I see is there appear to be companies who got the loans (likely early in the process) who really didn’t qualify and now it will be a loan and not a grant. I saw some employment staffing companies and HOA’s that received and they likely don’t qualify. 

A Different View

Daryl Carter had all the PPP application work for Maury L Carter and Associates lined up. Then he read the certification he had to sign, examined his conscience, and decided to pass.

There is no question that Covid-19 raised issues for Daryl’s business, but he thought that other businesses likely needed the money more than his did. So he passed He thought it likely that the shaming might come, but his decision was based on his moral code.

One of the guidelines we sometimes talk about is the Sixty Minutes Test. So Daryl is not too sympathetic of companies that might get shamed a bit when they are asked why they really needed the money.

And I have one more observation on the coverage.

Pareto Strikes Again

Jeff Drew in the Journal of Accountancy notes

In an 18-page report, the SBA and Treasury revealed that 86.5% of PPP loans were for less than $150,000. Those loans, however, accounted for only 27.2% of the $521.5 billion in loans approved. (Emphasis added)

I have to be a little amused at that “however”. It would actually be shocking if the percentages were not in that neighborhood. It is called the Pareto principle, also known as the 80/20 rule. The notion is that in many areas roughly 80% of the effects come from 20% of the causes.

Investopedia notes:

“Although the 80-20 axiom is frequently used in business and economics, you can apply the concept to any field—such as wealth distribution, personal finance, spending habits, and even infidelity in personal relationships.”

If you want a career as a business consultant to CPA firms you just need to tell them that 80% of their revenue comes from 20% of their clients – the A clients. 80% of their aggravation comes from a different 20% of their clients – the C clients.

You tell them to fire their C clients and pay more attention to their A clients. The light bulb will go on and they will see how smart you are. As it happens they will go back and each partner will fiercely defend his or her own C clients while generally agreeing with the firing of everybody else’s C clients.

This is good for your consulting business since they will remember how smart you are, but not that they don’t actually take your advice and will have you back again. If you can give your talk at a partner retreat where everybody gets drunk a lot, it works even better.

A Couple Of Shaming Examples

On this platform,, Andrew Solender has Vocal Opponents Of Federal Spending Took PPP Loans, Including Ayn Rand Institute, Grover Norquist Group. I have to say that it is really pretty amusing particularly the response from the Ayn Rand people:

The Ayn Rand Institute, named for conservative philosopher Ayn Rand, received a loan of between $350,000 and $1 million, which it called “partial restitution for government-inflicted losses.”

“It would be a terrible injustice for pro-capitalists to step aside and leave the funds to those indifferent or actively hostile to capitalism,” Ayn Rand Institute board member Harry Binswanger argued in May, stating that the organization would “take any relief money offered us.”

The New York Times coverage, on the other hand, is kind of ridiculous.

“One reported recipient was a hair salon in the president’s hotel in Chicago. More than 20 businesses listed at 40 Wall Street, an office building near the New York Stock Exchange that Mr. Trump has owned since the mid-1990s, also reportedly received government loans totaling at least $20 million. Among the recipients were law offices, financial service firms and nonprofit organizations.”

The President through Trump Properties owns a lot of real estate. There are a lot of tenants. What would be a story is if none of them took PPP money.

Disclosure: Forbes Media LLC was a recipient of a Paycheck Protection Program loan of $5 million to $10 million.