Have some companies taken out federal loans and still laid off all of their employees? [Lancaster Watchdog] | Local news


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Have some companies taken Paycheck Protection Loans and then broken the rules by laying off all of their employees?

LNP | LancasterOnline investigated after a reader asked why some local businesses listed in the Small Business Administration data did not report employees but were still receiving millions of dollars through the federal loan program.

According to the reader, the company they worked for fired its employees several times and reported that no jobs were retained even after receiving PPP dollars.

“(D) o doesn’t that mean you don’t meet the requirements of the program?” Asked the reader.

Analysis of the data for Lancaster County shows that approximately 18 companies that have received loans greater than $ 1 million have a zero in the “Reported Jobs” column.

The missing data is less a reflection of how many companies actually keep their employees, but more of how incomplete self-reported data can be, said Natalie Adams, spokeswoman for US Senator Bob Casey.

“The loans were not processed directly through the Treasury, but through banks, CDFIs (Community Development Financial Institutions), credit unions and similar institutions, and the Treasury would collect the bill if certain criteria were met (z) by companies that took out the loans said Adams. “Some lenders were better at collecting data than others.”

According to the database, BJ Baldwin Electric Inc. of Narvon received a loan of between $ 2 million and $ 5 million through the program and reported zero jobs.

“For us, it has certainly been misreported,” said Tom Fanning, vice president and general counsel for the firm. “We actually used 100% of the loan proceeds on payroll. We didn’t use it for anything else. “

The loan helped the company keep nearly all of its 400 employees on payroll, Fanning said.

Rod Messick, CEO of Homesale Realty Services Group Inc., based in Lancaster, also said his data was misreported.

“I don’t know which field was entered on which form that resulted in that number showing up in the data,” said Messick. “With that loan, we were basically able to keep all of our people.”

Because of the loan the company received, it was able to keep all of its employees – for example 340 overall – even during the time the store was closed due to measures to contain COVID-19, he said.


This is how the program works

The program, which was founded to help businesses cope with the economic turmoil caused by COVID-19, distributed more than 5 million yielding loans across the country.

The effort should “give small businesses the resources they need to keep their payroll running, get back any laid-off workers and cover overhead costs,” a Treasury Department press release said.

The loans were processed and managed by lenders across the country, and the data on who was approved was passed on to the Small Business Administration.

As the COVID-19 crisis worsens, Lancaster Counties and other Americans need Congress to help [editorial]

“A company didn’t have to provide the number of employees to get its loan, even though the SBA requested this information in the application,” said an SBA spokesman.

However, if they want to cancel their loans, companies will need to show how many employees they have retained, the spokesman added. And at least 60% of the loan amount had to have been used for labor costs.

Still, some companies could have used the program to get “cheap money” and not bother to keep their employees because the interest rate was capped at 1%, Adams said.

A clearer picture of which companies actually used much of the paycheck protection program money to keep employees on payroll won’t be available until after all loan applications have been processed, according to an SBA spokesman. The agency began processing and transferring payments to lenders in October.

Correction: An earlier version of this story gave the not correct overall for employees of Homesale Realty Services Group. The company has a total of 340 employees.


For more Lancaster Watchdog:

Radiation Is Forever: How Long Will It Take To Clean Three Mile Island? [Lancaster Watchdog]

When will the Ewell Plaza project in downtown Lancaster be completed? [Lancaster Watchdog]

Algae concerns, apparent bird shortage at Long's Park Lake [Lancaster Watchdog]

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