Consortium of news organizations wins legal fight against Small Business Administration

Consortium of news organizations wins legal fight against Small Business Administration
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After a monthslong legal fight over the transparency of one of the federal government's largest coronavirus relief programs, a judge in Washington required the disclosure of data on thousands of smaller business loan recipients.

The Small Business Administration's Paycheck Protection Program, created by the Coronavirus Aid, Relief, and Economic Security Act in March, has so far dispensed more than $525 billion in loans that can be forgiven if the money is mostly spent to keep employees. The Treasury Department originally declined to release the names of borrowers, maintaining that doing so would expose “proprietary information."

In May, ProPublica, together with several of the nation's largest news organizations, filed a Freedom of Information Act lawsuit to obtain the information. Two months later, the SBA released information on 650,000 businesses that received loans in amounts between $150,000 and the maximum of $10 million, representing a fraction of the total number of borrowers.

But the SBA only disclosed the loan amounts in broad ranges, saying that to be more specific would reveal confidential information about the businesses' payrolls, and it declined altogether to release borrower-level data on 4.5 million loans worth less than $150,000. It also withheld information on sole proprietorships and independent contractors receiving Economic Injury Disaster Loans, a program that disbursed $192 billion in total, saying that to do so would violate the recipients' privacy rights.

On Thursday, District of Columbia Circuit Judge James Boasberg rejected that contention, noting that borrowers had been informed via the loan application that such data could be revealed as a result of a FOIA lawsuit. The program is at significant risk of fraud, he added — in September, the Justice Department charged 57 people with violating the rules — and would therefore benefit from additional scrutiny.

“The significant public interest in shedding light on SBA's administration of the PPP and EIDL program dramatically outweighs any limited private interest in nondisclosure," Boasberg wrote.

The order requires the SBA to release the names, addresses and precise loan amounts of all PPP and EIDL borrowers by Nov. 19.

The previously released data (which ProPublica has collected into a searchable database) illuminated widespread abuse of the program, from businesses that took out more loans than they should have using multiple subsidiaries, to temporary help agencies that got outsized loans because their contracted workers were technically on their payroll. The data also helped to expose deep inequities in how the program was administered, with minority-owned businesses disproportionately receiving assistance late or not at all.

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