Bloomberg Businessweek - USA (2020-08-31)

P O L I T I C S

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A federalprogrammeanttohelpsmallbusinesses

hurtbythecoronaviruspandemicmayhavesent

morethan$1billiontoplacesit shouldn’thave

gone, accordingto aBloombergBusinessweek

analysisofSmallBusinessAdministrationdata.

InsomepartsofthecountrytheSBAapproved

farmore$10,000EconomicInjuryDisasterLoan

(EIDL)grantsthanthenumberofeligiblebusi-

nesses,theanalysisfound.Theepicenterwassix

adjacentcongressionaldistrictsintheChicagoarea,

where81,000grantswereapprovedeventhough

thereareonly19,000eligiblerecipients.That’smore

than$600milliongoingtophantomentrepreneurs.

TheSBAdeclinedtocommentonthediscrep-

ancies,sayingina statementithad“stringent

fraud-protectionsafeguards”andnotingthatit had

beenunderpressuretomovethemoneyquickly.

Bloomberg identified 52 congressionaldis-

trictsacrossthe nationwhere thenumber of

TheSmallBusinessAdministrationhandedoutmore$10,000

grantsthantherewereeligibleapplicantsin manyplaces

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Edited by

Amanda Kolson Hurley ILLUSTRATION BY WOSHIBAI

Bloomberg Businessweek August 31, 2020

A $1 Billion Bonanza for

Phantom Companies

$10,000grantsexceededthenumberofeligible

smallbusinesses,fora totalof$1.3billioninsuspect

payments. Illinois’s 2nd District, which includes a

swath of Chicago and its suburbs, had the great-

est excess, with 24,278 grants going to businesses

that listed addresses there. But the most recent U.S.

Census Bureau data show that only 1,925 small busi-

nesses in the district have at least 10 employees,

the number required to qualify for the maximum

$10,000 grant. Districts in Georgia, Texas, Florida,

and other states also showed payments to more

than the number of eligible companies. The Census

dataarefrom2017,andthenumberofbusinessesin

eachdistrictmayhavechangedsincethen.Butthe

discrepanciesuncoveredinBloomberg’sanalysis

are so large that potential increases in business

activityalonecan’texplainthem.

The suspect payments far exceed the

$47.8million that SBA Inspector General Hannibal