Congress challenges $696 billion in Paycheck Protection Program loans canceled by the Small Business Administration ahead of House oversight hearing

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Representatives point to loans to hotel chain Westmont Hospitality Group in letter to SBA calling for ‘vigilant oversight’ of loan forgiveness process: ‘Where did the money go?’

PHOENIX & LOS ANGELES, March 22, 2022–(BUSINESS WIRE)–On March 15, Congressman Ruben Gallego (D-AZ) sent a letter to the Small Business Administration (SBA) calling for vigilant oversight as $696 billion of the total $789 billion lent through the Paycheck Protection Program (PPP) phase has already been forgiven.

On March 16, UNITE HERE Local 11 presented testimony at a hearing of the House Small Business Administration’s Small Business Oversight, Investigation and Regulation Committee titled “An Empirical Review of the Paycheck Protection Program “.

The letter (available here) follows President Biden’s March 1 announcement that the Justice Department will appoint a chief prosecutor to focus on the most egregious forms of pandemic fraud. Gallego was joined by Reps. Linda Sanchez (D-CA), Adam Schiff (D-CA), Ted Lieu (D-CA), Nanette Diaz Barragan (D-CA), Grace Flores Napolitano (D-CA), Julia Brownley (D-CA), Norma Torres (D-CA), Alan Lowenthal (D-CA), Katie Porter (D-CA), Jimmy Gomez (D-CA), Raul Grijalva (D-AZ), Ann Kirkpatrick ( D-AZ), Kweisi Mfume (D-MD), Anthony Brown (D-MD), Ayanna Pressley (D-MA) and Darren Soto (D-FL).

The letter highlights Westmont Hospitality Group, an international hospitality company that owns and operates more than 400 hotels worldwide, as an example of the need for “vigilant oversight” and improved transparency. According to data provided by the SBA, Westmont subsidiaries received $48 million through 44 PPP loans tied to about 5,300 jobs. Even so, the letter says, a lack of transparency from the SBA has made it “impossible” to determine whether those 5,300 jobs have in fact been retained, but more than $28 million in Westmont-related loans have already been forgiven. .

The Paycheck Protection Program (PPP) was passed by Congress as part of the CARES Act of 2020 in an effort to support small businesses and save jobs amid the COVID-19 pandemic. PPP borrowers must spend at least 60% of their loans on personnel costs in order to receive full loan forgiveness.

UNITE HERE Local 11, the union that represents hospitality workers in California and Arizona, presented evidence to members of Congress about a Westmont-linked hotel that received a PPP loan but issued WARN Act notices stating that he had permanently separated 122 workers, raising the question of whether the PPP had really achieved its goal of protecting jobs.

As of January 3, 2022, the SBA had canceled $9.7 billion of the $13.9 billion in PPP loans to hotels. With the support of PPP funds, the hospitality industry has not only withstood the pandemic, but has grown on the backs of its workers, with fewer workers forced to work longer hours than before this unprecedented crisis. While the number of US private industry accommodation establishments increased by 1,375 between the first quarter of 2020 and the second quarter of 2021, the industry employed 443,600 fewer workers in February 2022 than in February 2020 before the pandemic.

Congressman Ruben Gallego said, “When the COVID-19 pandemic began, the Paycheck Protection Program served as an essential lifeline to keep our businesses open and hard-working Americans. In the years that followed, we’ve seen companies recover, but it hasn’t been clear whether some companies have kept their end of the bargain to keep workers employed.While the SBA continues to monitor the program, it is important for companies to be completely transparent in justifying the cancellation of PPP loans, which is why I am making this call on the SBA to inform Congress about what it is doing to protect the jobs of workers in the hotel.”

Elba Hernandez, housekeeper at the Hilton Santa Monica Hotel & Suites operated by Westmont, said: “In the many months that I have been laid off during the pandemic, I have not received a cent from Westmont. I am very upset that Westmont got $48 million and still hasn’t told us how they spent the money.” Hernandez’s employer is a limited liability company whose manager or member is a subsidiary of Westmont which has received PPP funds.

Groups supporting the letter include the Covid Oversight Coalition, Public Citizen, American Oversight, Americans for Financial Reform and United Steelworkers and UNITE HERE Local 11.

Lisa Gilbert, executive vice president of Public Citizen, said: “The Paycheck Protection Program was intended to provide funds to small businesses as a lifeline for ordinary Americans in times of crisis. To ensure that the funds were not abused and that they were used to keep Americans working is a key duty of Congress.Public Citizen strongly applauds Rep. Gallego for pushing for more transparency and accountability of PPP funds.

Aliya Sabharwal, Covid Oversight Campaign Manager at Americans for Financial Reform, said: “The Paycheck Protection Program was not meant to be a bailout for billionaire corporations. Small businesses are still struggling to stay open while the big corporations seem to have made a profit It’s We need to know where that taxpayers money went and to whom And if the corporations got it but didn’t follow the rules there must be consequences.

Congressman Gallego’s letter follows previous letters urging the SBA to improve transparency and oversight of PPP loans highlighting hotel chains: an October 2020 letter led by Congresswoman Porter, a letter from July 2021 led by Congresswoman Barragan and a February 2022 letter from Congresswoman Judy Chu asking the SBA to improve transparency around PPP loan forgiveness.

UNITE HERE Local 11 is a union representing more than 32,000 hospitality workers in Southern California and Arizona who work in hotels, restaurants, universities, convention centers and airports.

Congress letter available here

See the source version on businesswire.com: https://www.businesswire.com/news/home/20220322005993/en/

contacts

CA – Maria Hernandez | [email protected] | (623) 340-8047
AZ – Rachele Smith | [email protected] | (623) 670-9889

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