A federal judge for the U.S. District Court for the District of Columbia (the "Court") ordered the Small Business Administration ("SBA") to release the names, addresses and loan amounts for all Paycheck Protection Program ("PPP") loan recipients by November 19, 2020.

As described in the Opinion, the SBA has processed an "unprecedented" $717 billion in loans and loan guarantees through the PPP and pandemic-related Economic Injury Disaster Loan ("EIDL") program since Congress provided emergency funding for the programs earlier this year. The SBA initially refrained from disclosing the identities of the millions of loan recipients under these programs, as well as the specific loan amounts they received. Even after various news organizations sought the information through the Freedom of Information Act ("FOIA"), the SBA declined to provide both borrower names and dollar figures, among other loan-level data. The SBA invoked FOIA Exemptions  4 and  6 to support withholding the data from the FOIA requestors.1

The SBA argued that it must withhold certain loan-level data (e.g., borrower names or loan amounts) because release would reveal confidential information - specifically, a borrower's payroll information and/or personal finances. The Court found the SBA's arguments unpersuasive. The Court rejected the SBA's "fundamentally flawed" argument with respect to Exemption 4 that loan data necessarily reveals a business's payroll information. With respect to Exemption 6, the Court found that "significant public interest in shedding light on SBA's administration of the PPP and EIDL program dramatically outweighs any limited private interest in nondisclosure."2

The Court found in favor of the FOIA requestors and ordered that the SBA must release the names, addresses and loan amounts of all PPP and pandemic-related EIDL loan recipients by November 19, 2020.

Footnotes

1 Exemption 4 shields from disclosure "commercial or financial information obtained from a person and privileged or confidential," and Exemption 6 covers "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy."

2 As part of this analysis, the Court noted that the PPP loan application expressly notified potential borrowers that their names and loan amounts would be "automatically released" upon a FOIA request. The Court also noted that, as of mid-September, the DOJ had publicly charged more than 50 people with fraudulently obtaining PPP loans - a number that has grown larger by the week.

Commentary Kendra Wharton

As The Wall Street Journal reported this weekend, evidence of widespread PPP-related fraud has been mounting for months, even as the SBA declined to release detailed loan-level data. In September alone, FinCEN received 2,495 suspicious activity reports involving business loans - more than 10 times the number filed by lenders when the PPP opened in April. The SBA Office of Inspector General also recently reported that it received an unprecedented 35,000 hotline complaints in the month of September. The Court's order requiring the SBA to release all borrower names and loan amounts this month will inexorably fuel these dramatic trends - inviting greater public scrutiny of both individual PPP loans and the lenders who made them.

 

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