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Freedom of Information Act Requests Can Expose a Business’s COVID-19 PPP Loan Activity

By: Stephanie M. Martin Posted on: Sunday, May 17th, 2020

You’ve probably heard about the fallout from Ruth’s Chris Steakhouse and Shake Shack after they accepted funding from the Paycheck Protection Program (PPP), which is a government program that was intended to help small businesses pay their employees during the pandemic. Since these publicly traded companies received tens of millions of dollars, the public and small business owners want to know who else got the PPP money that seemed to run out so quickly. The public outrage over these loan shamed some large companies into giving back their loans.

FOIA & COVID-19

Such examples, have led some to pursue their rights to information under the Freedom of Information Act (FOIA).  People are seeking detailed information from the Small Business Administration (SBA) about the borrowers who received PPP funding.

The SBA has reported that it’s currently too busy to deal with the FOIA requests, but it seems likely that these requests will be granted eventually. This means that companies that were granted PPP loans may eventually come under scrutiny by the public and may incur negative publicity as a result.

What Should You Do If You Received a PPP Loan?

The best way to avoid public criticism is to ensure that you meet all the requirements set forth by the SBA. If you’re a small business, you probably don’t have a PR agency on retainer, but that doesn’t mean you might not incur backlash when the FOIA requests are released. Here are a few things to keep in mind if you received a PPP loan during the pandemic:

Don’t be defensive. You qualified for the loan, which means you deserved it.

Explain how you will use (or have used) the money. You don’t need to provide specifics, and you should refrain from being defensive.

Remember, everything you say could become a story. Many small businesses have never applied for federal loan programs before and don’t realize their information could be made available through public requests. It’s not uncommon to be unaware that this information is public record when you request a federal loan, but these tips can help protect you from public scrutiny, should you become eligible for a PPP loan.