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The majority of unforgiven PPP loans belong to one-person businesses


We've been talking this week about the Paycheck Protection Program, which effectively paid businesses to keep workers on the payroll during the pandemic. That money came in the form of loans, and the vast majority of those loans have been forgiven more than 90%. That is despite the program being criticized for giving money to undeserving recipients, even outright fraudsters.


So who are the small percentage of borrowers with unforgiven PPP loans? Austin Fast and I have been reporting on this for NPR's investigations team, and what we found may surprise you.


PFEIFFER: When I visited Candy Crawford at her home in Truro, Mass., on Cape Cod. She gave me a tour of her truck, which she jokingly calls her purse on wheels.

CANDY CRAWFORD: Because it's got everything and anything in there. If I need a saw, I have a saw, and then just whatever debris coming from gardens, if it's bags of fertilizer up in the front. I mean, it's a hodgepodge.

PFEIFFER: Crawford owns a small landscaping company called Handy Candy. When COVID shutdowns began, she got a PPP loan of about a thousand dollars - not much, but it tided her over until she was allowed to start working outdoors again.

CRAWFORD: I mean, it's always wonderful to get a thousand dollars in the mail. So it was just like a little extra cash, which was great.

AUSTIN FAST, BYLINE: But trying to get that loan forgiven has been an aggravation she never expected. Crawford got the loan through PayPal, rather than a traditional bank. Applying was easy, but a few months later, she got some confusing emails.

PFEIFFER: They said her loan had been transferred from WebBank to Customers Bank and would now be serviced by Windsor Advantage. She'd never heard of any of those companies, and she wondered if this was some kind of scam.

FAST: It wasn't. Crawford ended up being bounced from company to company to company for months as she tried to figure out the status of her loan and how to get it forgiven.

CRAWFORD: I would say we probably have at least 60 emails going back and forth at least. This is crazy. Pass the buck. Who is going to answer my question for me?

PFEIFFER: PPP loans were easy to get and easy to forgive, but more than two years after Crawford got hers, she was still waiting for forgiveness. That put her in a small minority of borrowers because 91% of all the loans have been forgiven so far.

FAST: The money was for businesses with no more than 500 workers. But NPR has found the smallest businesses, those with just one employee, have the most unforgiven loans - 14%. That number is just 3% for businesses with at least 10 employees.

PFEIFFER: Those one-person businesses include barbers, janitors, uber drivers, hairdressers. They seem like obvious examples of the type of workers who would most need support.


KATY ESCHER: How are you?

PFEIFFER: Good. I'm Sacha.

ESCHER: I'm Katy.

PFEIFFER: Katy, nice to meet you.

ESCHER: Nice to meet you.

PFEIFFER: You, too.

Katy Escher co-owns a Cape Cod clothing and gift shop called ARTichoke in Eastham, Mass. It's one of dozens of tiny businesses we contacted whose loans are still listed as unforgiven.

ESCHER: Right here, you're seeing a lot of our salt T-shirts because that's our most popular design. Our hats in the collection, tumblers, sweatshirts.

PFEIFFER: ARTichoke got an $8,000 loan through Square. That's the company lots of businesses use to take credit card payments. But when Escher asks Square about her forgiveness status, it tells her to ask the SBA, the Small Business Administration.

ESCHER: I don't know what to do. I can't get a hold of the SBA. And then when I talk to a human being on Square, they tell us to contact the SBA. So we're just in teeter-totter land here.

FAST: We heard about headaches like this from a bunch of people with PPP loans, and some borrowers make errors that end up botching their applications. Escher said if you're a busy small company with no support staff, you can't delegate the work.

ESCHER: We wear many hats. And sometimes you have to choose which hat you have to wear based on the season or the time. I wish that we had someone to say, hey; we need to figure this out, but we don't.

PFEIFFER: We also spoke with people who said they got bad advice from accountants or didn't understand the rules. Others told us they just haven't gotten around to applying for forgiveness or thought it was automatic.

FAST: One woman I called, a hair braider in Arizona, asked if I could give her information about her loan status. Meanwhile, unforgiven loans may be past due and accumulating interest. Not resolving them can damage a person's credit.

PFEIFFER: And there's a more nefarious reason some loans remain unforgiven. By the government's own admission, billions of dollars were lost to fraud. It went to fictitious companies. Here's MIT economist David Autor.

DAVID AUTOR: They just ran away with the money. They never existed. They got the money. They're gone. They won't be paying it back (laughter) 'cause they left the country, if they were ever here.

FAST: But a major reason some businesses have unforgiven loans has to do with where they applied for the money. Some borrowers got loans from traditional banks like Chase and Bank of America. Those loans are mostly forgiven. But if you went through a financial technology company, that's a different story.

PFEIFFER: These fintechs, as they're called, have names like Womply, Lendistry and Prestamos. Several fintechs have been investigated by Congress for ultra-fast lending practices that led to high rates of fraudulent PPP loans. Maybe you've heard of some of them - Bluevine, Cross River Bank, Celtic Bank and Kabbage.

NANCY KELLY: The amount of stress caused by dealing with Kabbage, that almost was like a second catastrophic event.

FAST: Nancy Kelly owns a small accounting firm that got a PPP loan for $60,000 through Kabbage. That part was simple. Getting it forgiven was not. And she realized she was far from alone when she discovered a Facebook group for Kabbage customers.

KELLY: All these small businesses, they were just torturing them. And I said to myself, this should be the basis of a class action lawsuit.

PFEIFFER: Actually, it is. Kabbage has been sued in federal court. The suit claims Kabbage was quick to approve PPP loans. It brags on its website about an average wait time of 4 hours, but dropped the ball when it came to forgiving them. In an email to NPR, the CEO of KServicing, a Kabbage affiliate, wrote, we will continue to work with our borrowers to help ensure they take the steps required to obtain forgiveness by the SBA. But last week, Kabbage and KServicing filed for bankruptcy.

FAST: The SBA said Kabbage specifically has gotten a lot of complaints, but it doesn't see a broader problem with financial technology companies. It also said some fintech loans may not be forgiven because borrowers are procrastinating or their forgiveness applications aren't due yet. The SBA said it expects most remaining loans to be forgiven this fall.

PFEIFFER: Back on Cape Cod, Candy Crawford of Handy Candy landscaping nearly reached her wit's end trying to get her $1,000 loan forgiven, when at one point, a customer service agent told her her loan had a problem and there was a hold on it.

CRAWFORD: I said, hold. What's that mean? She said, I am not able to disclose that information to you. I said, OK, so this is my loan, but you can't tell me why my loan has a hold? She said, no, I can't tell you anything about it. I'm like, wow.

PFEIFFER: After I met Crawford, I contacted all the companies involved in her loan. A few days later, she got an email that read, we are pleased to announce that the customer's bank forgiveness portal is now ready to accept your forgiveness request. And last week, she learned that more than two years after she got her loan, it's been forgiven. But for many other businesses, the quest for PPP loan forgiveness continues.

FAST: I'm Austin Fast.

PFEIFFER: And I'm Sacha Pfeiffer, NPR News.

KELLY: And NPR's Sierra Lyons also contributed to this story. Transcript provided by NPR, Copyright NPR.

Sacha Pfeiffer is a correspondent for NPR's Investigations team and an occasional guest host for some of NPR's national shows.
Austin Fast is the inaugural Roy W. Howard Fellow on NPR's investigations team.
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