ESPN reported on Monday that the Lakers had returned a loan they received through a federal aid program for small businesses hard hit by the coronavirus.
By Andrew Soergel, Senior Writer, Economics
HE LOS ANGELES LAKERS received – and subsequently returned – more than $4 million in financial support from a federal program designed to facilitate loans to small businesses to help keep them afloat in the midst of the ongoing coronavirus pandemic.
In a statement issued to ESPN on Monday, the basketball team said it "qualified for and received a loan under the Paycheck Protection Program" for roughly $4.6 million. The team clarified that "once we found out the funds from the program had been depleted, we repaid the loan so that financial support would be directed to those most in need."
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That the National Basketball Association's second-most valuable franchise by market value and third-highest revenue generator – with league-high annual operating income of $178 million, according to Forbes – received funds intended for small businesses adds to a growing perception on Capitol Hill that the Paycheck Protection Program's loan disbursement mechanisms are broken and that, more broadly, President Donald Trump's administration's response to the ongoing coronavirus outbreak has been slow, insufficient and inequitable.
Big banks have been sued in recent days for allegedly prioritizing larger, more profitable clients in distributing loans. The Trump administration has been criticized for declining to provide greater oversight over the program and for initially failing to communicate certain specifics of the loans to large financial institutions.
"Failure to ensure the funds will be delivered swiftly and equitably to the Main Street small businesses that need help the most is a huge oversight that must be corrected immediately," Frank Knapp Jr., co-chairman of Businesses for Responsible Tax Reform and CEO of the South Carolina Small Business Chamber of Commerce, said in a statement on Friday. "This money should not go to large companies with access to other forms of capital that can help them weather the crisis."
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With a somewhat loose federal definition of what qualifies as a "small business concern" that would make a company eligible for aid, large chain restaurants such as Ruth's Chris and Potbelly have in recent days been pressured into returning tens of billions of dollars in Paycheck Protection Program loans, with many smaller establishments saying their requests either weren't approved or weren't finalized before the program's $350 billion in initial funding ran out in mid-April.
There are some stipulations, but most businesses that receive loans and put the funds toward paying employee wages could see some or all of their outstanding loan forgiven through the Small Business Administration.
Lawmakers last week signed off on funneling more than $300 billion in additional funding into the program, with Small Business Administration Administrator Jovita Carranza on Monday announcing that more than $2 billion in funding would be added to the program from loans that were "either declined or returned and will be made available during the current application period." That window for new applications opened on Monday morning.
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But perceived flaws in the program's distribution of loans were left unpatched. Lawmakers were praised by members of the small business community last week for opening up additional funding but were warned that, without the implementation of more specific guidelines, there's no reason to think this round of Paycheck Protection Program funding will play out any differently than the last one.
"Only true legislative and regulatory reform will address this issue and guarantee the money goes to those entrepreneurs who actually need their government to support them during this crisis," Knapp said. "Failing to get money to real small business owners will have dire consequences for the country."
Andrew Soergel, Senior Writer, Economics
Andrew Soergel is a senior writer covering economics for U.S. News & World Report. He joined ... READ MORE
Tags: coronavirus, loans, small business, Small Business Administration, NBA, economy, employment