SBA Loan Funding Has Run Dry & Adult Still Shut Out From Applying

WASHINGTON, D.C.—As many political observers had expected, the Small Business Administration's Paycheck Protection Program ran out of funds mid-last week, as did the funding for its Economic Injury Disaster Loan Program, both of which still exclude businesses which make more than a small part of their income from activities/content of a "prurient sexual nature"—a qualifier not applicable to U.S. adult businesses, and at least one lawsuit has been filed to attempt to make the SBA's eligibility evaluators see the error of their ways. But there may be good news on the horizon, as The New York Times reported on Sunday that congressional Democrats and Trump's White House have "closed in on an agreement for a $450 billion economic relief package to replenish a depleted emergency fund for small businesses and to expand coronavirus testing around the country, with votes on the measure possible early this week." The big question remains, however, whether $450 billion will be anywhere enough to keep the country's small businesses afloat during the pandemic shutdown, considering that it took less than two weeks for the SBA to blow through the original $349 billion granted to it under the CARES Act—and because, according to some commentators, a good chunk of that money found its way to businesses that could hardly be described as "small," and disproportionately to states considered "red" rather than "blue." For example, in bright-red Texas, among the first "small businesses" to get SBA money—$20 million, in fact—was Ruth's Chris Steak House, which received its loan on April 7, four days after applications were first being accepted. But Ruth's Chris employs more than 5,000 workers—and the criteria for receiving an SBA loan specify that the company must employ less than 500. Also, the loans are supposed to be limited to $10 million per company—so Ruth's Chris had two of its subsidiaries apply for loans independently—and it's not as if the SBA has any resources to check whether companies are eligible, right? "All in all, a big, big proportion of the money was in $1 million or more loans, 47% as of April 13," reported Joan McCarter of DailyKos, who also noticed that, "Three-quarters of Nebraska’s eligible payroll got the funding; 71% of North Dakota’s did. That powerhouse of the nation’s business, North Dakota. While California’s and New York’s got less than a quarter of their share. D.C. only got 19%." California Rep. Jackie Speier thought that was a little odd as well, tweeting, "Can someone explain to me how Texas has been approved for $1 billion more in SBA loans—& more than 30,000 loans!—than California despite our economy being $1 trillion larger & California being much harder hit by COVID-19?" "Thus far, the geographic flow of the funds is also not lining up with the economic damage from the virus," The New York Times noted on April 15, the day before the funds ran out. "New York companies have secured less than half as many loans as Texas companies, for example, even though the share of New York’s labor force that has filed for unemployment is twice as high as Texas’s." Another problem is that the bulk of the funds originally allocated went to the country's largest banks such as Wells Fargo, Bank of America, Citibank and others, while smaller financial institutions, which tend to serve primarily smaller, rural communities, got far less. And apparently, even the Republican-controlled Senate is beginning to understand that Ronald Reagan's famous "nine most terrifying words in the English language, 'I'm from the government and I'm here to help,'" don't stand up well against the economic and social devastation being wrought on society by the COVID-19 pandemic. According to a report in The Hill newspaper, although negotiations for an additional aid package are still ongoing, the Senate is expected to come to an agreement on such a package later today or tomorrow, and vote on it before the end of Tuesday. But again, whether adult companies will see even a dime of that bailout is something that likely will have to be settled by a judge in court.