The agency doubled down on its long-held position that revealing the loan totals would indirectly expose private companies’ payroll information, an argument the judge rejected. An SBA representative declined to comment Friday on whether the agency plans to appeal.
“Borrowers are already suffering from the dramatic decrease in economic activity the pandemic inflicted,” federal attorneys representing the SBA wrote. "It would contradict the purposes of the CARES Act to subject them to further risk — in particular, the risk of competitors and other interested parties inferring payroll information from loan amounts and attributing that information to particular businesses, and using that information to the disadvantage of borrowers.”
Congress approved the Paycheck Protection Program in March as part of the Coronavirus Aid, Relief, and Economic Security (Cares) Act. It was intended to keep workers paid and companies open during the coronavirus pandemic and shutdowns. But a dearth of information about loan amounts and loan recipients has made it difficult to fully and accurately gauge the program’s effectiveness.
The SBA and Treasury Department have released detailed industry and state breakdowns showing where the PPP spending went throughout the program’s rollout, and have touted claims about the program’s job-creation successes in news releases and congressional testimony. But they have tried to prevent most of the business names and specific loan amounts from being made public.
The motion filed Thursday is the latest legal roadblock preventing the public from learning who received several hundred billion dollars’ worth of subsidized small business loans. Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza initially told members of Congress that recipient names and loan amounts were confidential and would not be released at all.
The Post filed a Freedom of Information Act for this information on April 24. After the SBA failed to respond in the time required by law, The Post and 10 other national news organizations eventually sued for the release of this PPP loan information.
In response to the lawsuit, the SBA posted loan-level data of 660,000 business and nonprofit organizations that received at least $150,000 in funding. The D.C. federal court opinion, written by Judge James Boasberg, cites data showing that many of these loans went to large businesses, including at least 45 of the nation’s highest-grossing law firms.
“Indeed, as the Court is painfully aware, many mid-level associates earn more than federal judges,” the judge wrote.
The SBA balked at providing exact loan figures for any of the loans as well as borrower information for loans of less than $150,000, an estimated 87 percent of all PPP loans. The agency claimed that FOIA’s confidential business information and personal privacy exemptions allowed the agency to withhold the records. The Treasury Department estimates that more than $525 billion in loans have been disbursed.
Boasberg rejected these arguments, issuing an order requiring the SBA to release the names, addresses and precise loan amounts of all individuals and entities that obtained the PPP loans by Thursday. Boasberg also required the SBA to release related Economic Injury Disaster Loan information, a separate small-business bailout program.
In his memorandum justifying his opinion, Boasberg noted that despite the SBA’s claims that loan information was confidential business information, the PPP loan application itself stated to potential borrowers that the names of borrowers and amounts of loans would be “automatically released” in response to a FOIA request.
He also ruled that the personal privacy concerns of borrowers wishing to remain anonymous were outweighed by the public interest in discovering the fraud, waste or abuse of taxpayer funds, noting that the Justice Department had charged more than 50 people with fraudulently obtaining PPP loans that resulted in at least $80 million in losses.
According to Boasberg, “many important aspects of their operation remain veiled. Disclosure of the identities of recipients of PPP loans … will contribute substantially to public understanding of SBA’s [performance]."
The program’s next phase has already started as loan recipients have submitted applications seeking to have their loans forgiven, a key component of the PPP that made the SBA loans far more attractive than anything available in the private credit markets. The SBA has eased the rules to make it easier for smaller loan recipients to receive forgiveness.