Also while the PPP program was mismanaged and didn't have enough over sight it was intended for the loans to be forgiven if they were used to keep employees on during the pandemic. That's a good idea in practice. I think calling them loans instead of conditional grants was what confused a lot of people. They were never intended to be paid back.
They needed to use a program that directly covered salaries and avoided just giving money directly to ownership.
Instead the PPP program wasn't just built on trust but essentially became a near trillion dollar slush fund (that was almost immediately levered by many to buy houses and financial assets) that promoted outright financial fraud and incredibly enriched the very people that didn't need help.
Meanwhile the press was going bonkers trying to spin how ridiculous it was to send individuals $1,500 one-time checks.
No, the PPP program wasn't a good idea; it was one of our generations greatest thefts by the top 5% of our population and helped set off the housing inflation and affordability crisis we continue to experience til today.
I mean, in the vast majority of cases, if not all of them, the money did directly cover salaries. That wasn't how people grifted the money from PPP loans.
Payroll is often 50% or more of a business' expenditures. So, if a company does $1 million in business a month, ~500,000 of that is likely to go towards payroll. During the pandemic, the assumption was that your business was going to shut down, running on a skeleton crew, so you were only expected to make $250,000 per month, which means the government needs to 'loan' you $250,000 so that you can keep all of your employees on payroll and still pay them even if they aren't working.
But what if you just ... don't shut down? Or your business doesn't actually decrease? Now you've gotten $250,000 from the government for payroll, you use that $250,000 to pay payroll, but you still made your normal $1 million per month. That leaves you with an extra $250,000 profit that you normally wouldn't have that you can just do anything with.
That's how most of the PPP money was 'embezzled', 'stolen', or 'misappropriated'. Nearly all of the money from PPP loans did directly go to paying payroll. They were just paying the payroll for businesses that weren't actually impacted by COVID and thus those businesses just saw a massive amount of free profit which could go directly to the C-suite/business owners.
You are right that the PPP loans weren't a good idea. Instead, it should have been an unemployment type situation where individual people could get X% of their salary for Y months.
I ran a single one-person business and was just about to submit for a PPP loan I absolutely didn't need (to pay my own salary) when they implemented an emergency measure that the business had to be a certain size. I had dragged my feet because obviously this program didn't apply to businesses like mine until my payment processor reached out saying it did and here's how to apply.
Obviously I shouldn't have gotten one anyway, but the fact that it was ultimately yet another measure favoring larger businesses over small ones (on top of mandatory shutdowns etc) certainly didn't help anything.
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u/Murky-Relation481 4h ago
Also while the PPP program was mismanaged and didn't have enough over sight it was intended for the loans to be forgiven if they were used to keep employees on during the pandemic. That's a good idea in practice. I think calling them loans instead of conditional grants was what confused a lot of people. They were never intended to be paid back.