US data disclosure reveals flaws in $520bn rescue funds process

A venture capital firm, a multibillion-dollar start-up, a bond fund manager and a New England boarding school are among those listed as beneficiaries of the US government’s $520bn small business bailout programme that say they have not taken any money, raising questions about the administration’s process in allocating funds.

Bird, the e-scooter company valued at $2.8bn, said it was “erroneously” listed as filing for a Paycheck Protection Program loan after the data showed it received between $5m and $10m, the maximum range available under the scheme.

Index Ventures, a venture capital firm that recently raised $2bn for a series of funds, was shown as receiving in the range of $2m to $5m in aid for one of its earlier vehicles, Index Ventures VIII.

The address on its entry corresponded to Pilot, a bookkeeping software start-up that Index has backed. Radius Bank, the Boston-based bank listed as the venture capital firm’s lender, said it had submitted an application for Pilot and listed Index among the investors. “We can confirm that none of the Index Ventures fund entities have applied for a PPP loan from Radius Bank,” a spokesperson said.

Advent Capital Management, a convertible bond fund manager, also said it had “explored but never completed an application, and as such, did not receive any pandemic aid”, despite being listed as receiving $1m to $2m. A spokesperson for Dime Community Bank, listed as Advent’s lender, said Advent had withdrawn the application and did not receive any money.

Choate Rosemary Hall, the New England boarding school that educated Ivanka Trump and John F Kennedy, also said it had not received the $5m to $10m allocation, which was shown in the data.

Some of the those listed by the administration complained that the information released about PPP borrowers was misleading.

“The list that was released was a list of organisations that were approved, not that accepted the money,” said Alison Cady, director of strategic planning and communications at Choate. “It has been implied by the [Small Business Administration] that the organisations received money, not the same thing.”

Bird chief executive Travis VanderZanden said on Twitter his company had spoken with the bank Citigroup about filing an application but did not advance further because “the money was more deserved by small and local businesses”.

A Citigroup spokesperson confirmed the bank had not funded a PPP loan for Bird, which laid off more than 400 employees, or about 30 per cent of its workforce, in March after the pandemic forced it to suspend its scooter rental business. “Citi will seek the assistance of the SBA to ensure that the agency’s data accurately reflects actual PPP lending,” the bank said. The US Treasury did not have any comment regarding the Bird statement.

The move to disclose the names of recipients followed bipartisan pressure from Congress for greater transparency about the programme, which has been simultaneously credited with keeping the US economy on life support and criticised for its chaotic rollout and the types of companies that were allowed to access funds.

The Treasury and SBA released the names of all businesses who had received more than $150,000 from the PPP, along with aggregate data about smaller loans.

In a call on Monday morning with reporters, multiple senior administration officials repeatedly stressed the data disclosure would not include some 170,000 PPP loans — amounting to about $38.5bn — that had been either cancelled or returned by the end of May.

But ZocDoc, a start-up medical care booking service, said it had been incorrectly listed as a loan recipient despite returning the money more than a month ago when it raised additional funding. The PPP data showed the company had received between $5m and $10m.

Asked why some companies were listed as PPP borrowers when they had not receive loans, a senior administration official later on Monday stated that all the companies listed in the data disclosures had submitted PPP applications into the SBA’s electronic transmission system via their approved PPP lender.

“If a lender did not cancel the loan in the [electronic transmission] system, the loan is listed as part of today’s data disclosure,” the official said, without providing any more information or information about the specific companies.

Venture capital groups had lobbied for their portfolio companies to gain access to the programme, winning the backing of prominent Democrats including House speaker Nancy Pelosi.