The Washington Post is reporting on yesterday’s court-ordered PPP loan data dump by the Small Business Administration.  In a rush to support a breathless income inequality headline, they forgot to report on the real purpose of PPP — covering employee payrolls.

Here’s the key graphic:

The top 1% percent of PPP borrowers got 25% of the loan amounts?  Sounds bad.  But is it?

The primary goal of the PPP was to keep workers on payroll and off UI.  To that end, the PPP funded more than 5 million business loans, the amount of those loans was capped at $10 million, and the maximum loan amounts were tied to an employer’s payroll – specifically 2.5 months of their payroll.  The more payroll, the bigger the loan.  Finally, loan forgiveness was tied to how the loan proceeds were spent.  If the business used the proceeds to maintain their payroll and cover other fixed costs, the loans would be forgiven.

So the Post 1% analysis boils down to this — 50,000 PPP loans were made to larger businesses with monthly payrolls averaging $1 million.  At an annual compensation of $50,000, the employment of those businesses would have averaged around 240 employees.  That’s a good-sized business, certainly, but it’s still defined as “small” by SBA standards, and it’s about 797,000 fewer employees than Amazon.

So the Post’s BIG discovery is that businesses with larger payrolls got bigger PPP loans.  That is exactly how the program was designed to work.  Moreover, the PPP finished its run with more than $100 billion in funds left unborrowed.  No smaller businesses were turned away from a PPP loan due to lack of funding or crowding out by bigger businesses.

With the year ending the COVID-19 shutdowns continuing, Congress needs to ignore the Post and reauthorize the PPP.  Certain improvements need to be made, including clarifying that PPP loan forgiveness is tax free as Congress intended, but as long as state and local governments tell businesses to remain closed, or to operate at half speed, the Federal government needs to respond with help.  The PPP could be improved, but it is still the best response to the COVID-19 shutdowns so far.