Last Thursday, the US Small Business Administration announced that in a couple of weeks, it had blown through $347 Billion dollars in loans meant for struggling small businesses. The program called Paycheck Protection Program (PPP) was part of the CARES Act $2 Trillion Aid package approved by Congress. PPP was designed to allow small businesses to pay employees during the Covid-19 crisis in a post-pandemic economy in which 1 in 10 Americans are unemployed or under-employed.
The following day, the news hit that a majority of the funds meant for small businesses went to many publicly traded companies worth hundreds of millions (see table 1. below) and included some larger chains restaurants and hotels, who were allowed to apply as locations and subsidiaries. The GOP including our own Senator, Martha McSally, blamed banks but the loophole was the result of provisions included in the package after some heavy lobbying by the restaurant and hotel industries.

Some corporations applied for dozens of loans for their smaller companies. Owners of local fragile small businesses were left in shock as the news hit that they would not receive any of the aid money. To make matters worse, large banks like Chase, Bank of America, Wells Fargo and BankCorp front loaded businesses asking for larger amounts. Why? “Banks would collect larger processing fees – nearly $6 billion in total – by frontloading the queue with businesses seeking higher loans,” according to a lawsuit filed against JP Morgan Chase. Profiting from the aid meant to help desperate companies pay their employees is what Capitalism demands, right?
Back in 2018 in the heat of a campaign for Arizona’s Congressional District 2, which covers the majority of Pima County and all of Cochise County, we wrote about Republican and Chamber darling, Lea Marquez Peterson. Marquez Peterson campaigned on her experience as a small business owner and CEO/President of the Hispanic Chamber of Commerce. She said she was uniquely qualified as an expert in small business despite having bankrupted multiple companies and depleting all resources of the Hispanic Chamber during her tenure. She claimed most of her campaign donations were from small businesses. Spoiler alert, they were not. But, her claim got us thinking. Who are the small businesses in Pima County, and what impact do they have on our economy? In our research we found that the small business numbers for CD2 didn’t exist so we set out to create them. After days of crunching numbers from the US Census Bureau, we created a picture of the makeup of small business in our Congressional District. Here’s what we found:
49 percent of businesses in CD2 have 1-4 employees. Companies with 1-19 employees make up the lion’s share at 84 percent. And less than 6 percent of companies have 50 employees or more. Our region runs on small business with employees of 1-19.


As we wrote in 2018, lumping together a 1-4 employee company and a 500 employee company into the same category of small business is like saying a plankton and a human are both animals. While the federal government had to create some parameters for the aid, many warned that the system did not have sufficient protections from insiders rigging the results.
Thursday, as news hit that the money had run out, several local Facebook posts asked folks who had applied for the aid to share whether they had received it. One person declared they had received the money. Four people had been approved but hadn’t received the money. Over a hundred others shared a similar story of applying and never hearing back.
The most popular provision of the program was that the loans would be forgiven for companies that held off on laying off their employees for 8 weeks. Restaurants, medical practices, retailers, printers, tire shops, non profits etc. continued paying their employees with hope that the loans would come. Employees were not eligible for unemployment insurance, and thus are left out of receiving any relief.
Dee Dee Koenen owns PopCycle on Fourth Avenue along with her sister, Jennifer Koenen, and partner, Shannon Riggs. PopCycle is a store that showcases the handmade craft and art of over 100 artists. They have 10 employees. “As a small business we operate with little margins for upset. The cascading damage wrought by the coronavirus is wiping out small businesses’ cushion. Small business teams are more than employees. They are family and help make a business unique,” said Dee Dee who also serves on our Board.
“Business is a cobweb of human relationships. The idea of not being able to support our team is devastating.” As Dee Dee points out, Tucson and other Southern Arizona communities’ heartbeat is made up of the people who own and work in small businesses.
As Congress decides the next aid package, many of the companies on the larger end of the SBA spectrum are lobbying members of Congress to relax the regulations on how they can use the loans. The current PPP requires that in order to have the loans completely forgiven, businesses must spend 75% of the federal money on payroll and 25% on fixed expenses such as rent, utilities and other bills.
The last go around, it appears that Southern Arizona got the shaft. The top 5% got the lion’s share of relief. It seems that some GOP members of Congress and Senators are uneasy about the appearance of the inequities of loan disbursement and amounts. They are “demanding” that certain entities return the money. But Twitter platitudes and votes are very different things and a tweet won’t provide any relief to the most fragile businesses scrambling to stay afloat. The latest package approved by the Senate yesterday includes some fixes to some of the inequities such as earmarking $30 billion to community banks and credit unions rather than the big banks. However, it remains to be seen if these changes will pass in the House and which loopholes will be written into the package. One certainty is that the system is always rigged toward those who already benefit, while the rest of us are left scrounging for scraps.