But then, the federal Paycheck Protection Program has been operating in mysterious ways.

While the loans have been a lifesaver for tens of thousands of small Georgia companies, a detailed review by The Atlanta Journal-Constitution of the list of PPP loan recipients turned up a slew of irregularities, some pointing to sloppiness within the hastily administered program, others to potential fraud.

Payday lenders, who burden consumers with sky-high interest rates, appear to have received loans. So do other businesses that profit from the downtrodden.

Taxpayer money also appears to have gone to private equity firms and their portfolio companies, which don’t qualify for PPP loans since they have access to other sources of funding.

Politically-connected businesses and nonprofits scooped up other loans. For example, an Augusta construction company once controlled by U.S. Rep. Rick Allen, R-Ga., got a loan of between $350,000 and $1 million. A Bonaire-based trucking company called Perdue Inc., affiliated with Trump’s Secretary of Agriculture and former Georgia Gov. Sonny Perdue, received between $150,000 and $300,000. The Faith & Freedom Coalition in Duluth, founded by one of President Trump’s evangelical allies, Ralph Reed, got between $150,000 and $350,000.

» RELATED: Georgia companies accused of federal violations got COVID relief loans

» MORE: Where you have to wear masks in Georgia

Kathleen Day, a lecturer at Johns Hopkins Carey Business School and author of “Broken Bargain: Bankers, Bailouts, and the Struggle to Tame Wall Street,” said the Trump Administration’s management of PPP could go down as the biggest fiscal disaster of the pandemic.

“There are going to be companies in Atlanta that are getting this money that shouldn’t get this money,” Day said. “The money’s not going where it’s supposed to go. It’s supposed to keep people working. If you don’t have people working, then you don’t have people spending money. When you don’t have people spending money, that’s when the economy tanks.”

Credit: Steve Schaefer for the AJC

Credit: Steve Schaefer for the AJC

There are cases, though, where what seems appalling isn’t even accurate. The PPP loan data released by the U.S. Small Business Administration contains errors, the AJC found. Many seem harmless, such as misspelled company names. In one case, a company with no name listed, and whose address is a UPS box, is marked as receiving $350,000 to $1 million. ReadyCap Lending, which approved that loan, did not respond to messages from the AJC seeking an explanation, but the UPS box matches Bamjo’s Trucking in Pooler.

Georgia Power is listed as getting $1 million to $2 million, which the SBA shows was used to retain six employees. A Georgia Power spokesman said the information is wrong and the utility did not receive a PPP loan.

Other errors have caused heartache for those appearing on the list.

Maven Capital Advisors, an Atlanta investment bank with three employees, is reported to have received a loan of between $5 million and $10 million from Bank of America. In reality, Maven got an $82,375 loan, said founder Greg Cohn. Bank of America omitted a decimal point when it reported the loan to SBA, leading to the database error.

It’s been a costly error for Maven, Cohn said. Now people incorrectly believe Maven cheated the system, since PPP loan amounts are based on employee counts.

“We’ve been tarred and feathered on Twitter feeds,” Cohn said. “This has been really devastating to our business, and we’ve got to try to fix that.”

Bank of America submitted the corrected loan amount to the SBA before the loan was funded, a company spokesman said. He added that he didn’t know why the SBA used the incorrect figure.

Scott Griffin owns two houses in Savannah’s historic district, which he remodeled and now rents out to tourists through Airbnb. Peak season usually begins in March, but that’s when the pandemic caused his rental business to tank, leaving him $75,000 in the red, he said.

» COMPLETE COVERAGE: Coronavirus in Georgia

Asked how much his PPP loan of between $350,000 and $1 million will help – the amount listed in the federal database – Griffin’s heart raced. “What says that?” he said. “It was nowhere, I mean not even anywhere, in the ball game of $350,000 to $1 million ... I’m really, really worried right now.”

A spokeswoman for Radius Bank, which approved his loan, confirmed that his loan was actually for about $7,900. Some customers added two extra zeros in their applications, to indicate cents, but the spokeswoman said the bank corrected this in SBA’s loan servicing portal well before the loan was granted.

Griffin said the money he received will go toward mortgage payments and electric bills, but he’ll probably still have to sell one of his properties.

“I was worried about hurricanes,” Griffin said. “I had no idea that anything like this could happen, until it did.”

Credit: Special

Credit: Special

Fast loans approved en masse

PPP loans have been highly coveted both for the relative ease in obtaining them and because they can be forgiven – essentially converted into grants – if recipients keep their workers on the payroll or use the money for wages, rent, mortgage interest or utilities. What’s not forgiven must be paid back in two or five years at a 1% interest rate.

While Congress may have been aiming to help small businesses survive when it approved billions of dollars for the program, it was launched without key safeguards.

To speed up the process of injecting money into a suffering economy, the Small Business Administration told lenders to trust applicants’ word that they did indeed qualify for the loans. This effectively rang the dinner bell for bad actors looking to put hands on large sums of money quickly, with few questions asked.

“When free government cheese is offered, everyone signs up for it, including the bad guys,” said Christopher Marinac, a banking industry analyst at Janney Montgomery Scott.

The program had so few quality controls that Marinac advised banks to establish legal reserve funds due to the likelihood of future litigation.

What’s more, government watchdogs found that rules and guidelines were poorly written, allowing questionable businesses to receive bailouts. The program clearly bans any companies that lend money from receiving PPP loans.

But many companies are engaged in more than one line of business, some of which may be eligible and some not.

Credit: Steve Schaefer for the AJC

Credit: Steve Schaefer for the AJC

Atlanta Check Cashers, headquartered in Peachtree Corners, is shown as receiving a loan of between $350,000 and $1 million from Metro City Bank in Doraville. The website of Choice Loan of Georgia, an industrial loan company regulated by the state Insurance Commissioner, directs consumers to Atlanta Check Cashers locations to apply for a personal loan. Check-cashers are allowed to receive PPP loans, but personal loan companies are not.

Two companies that make online loans to small businesses also are shown as receiving PPP loans, IOU Financial and LendingPoint LLC, both headquartered in Kennesaw.

Investa Services, the collection firm that routinely buy liens against Fulton County property owners who fail to pay taxes – reaping profits through penalties and interest or by acquiring the properties and selling them – received between $350,000 and $1 million, the database shows.

Several firms that appear to be involved in private equity – BVT National Capital Partners, Crawford Investment Counsel and corporate entities affiliated with Noble Investment Group – all received loans.

None of those companies responded to phone and email requests to talk about their PPP qualifications.

Oversight and transparency have also been at issue. The Trump Administration had balked at releasing the list of recipients and the amounts they received. But following an outcry from Democrats and Republicans in Congress, along with an ongoing Freedom of Information Act lawsuit by news organizations, the SBA earlier this month released a partial database.

In many ways, the truncated release has only created more questions. The list doesn’t show the race or gender of the vast majority of borrowers, so it can’t be determined how many loans went to disadvantaged businesses. The list also doesn’t name companies taking less than $150,000; in Georgia, almost 133,000 businesses received under that amount. For larger loans, instead of showing loan amounts SBA grouped them into five sets of ranges, such as “$150,000 to 350,000” or “$5-10 million.”

Despite the flaws, on a wide scale, the $519 billion PPP initiative provided money to millions of businesses across the country when they desperately needed it. The vast majority of applicants were legitimate, said Rob Klingler, a banking attorney at Bryan Cave Leighton Paisner.

“Probably 99-plus percent of the PPP borrowers were eligible and good businesses,” Klingler said.

For many, such loans were a lifeline, said Dan Oliver, CEO of Vinings Bank in Smyrna, which issued about $184 million of PPP loans. “I do believe it accomplished its goal of keeping people employed,” Oliver said.

The risk to lenders

SBA hasn’t detailed how it will review loans and recover money obtained by businesses that shouldn’t have received it.

But financial institutions that processed the loans could be legally responsible in some cases, said Ross Delston, a Washington, D.C., attorney who advises banks on regulatory compliance.

While SBA guarantees the loans, the financial institutions had a responsibility to review PPP loan applications for potential fraud and loan officers should have detected the many red flags that popped up, Delston said.

“A company without a website is a red flag,” he said. “A company in business less than a year is another red flag. A company incorporated after the PPP initiative was announced should have been a disqualifier.”

Atlanta-based Kabbage, an online lender, became heavily involved in PPP loans in April after it closed credit lines for its existing small business borrowers due to the pandemic, issuing some $6 billion in PPP loans nationwide.

Among them was the loan for God’s Anointed Youth Ministry. The ministry is run by Detra Lewis, an ordained minister, who did not respond to repeated requests to discuss the ministry’s participation in PPP. Someone managing God’s Anointed Youth’s email referred the AJC to its Instagram page and a website that had been created one day earlier.

Credit: Special

Credit: Special

Kabbage President Kathryn Petralia declined to discuss the borrower or the loan.

Kabbage has discovered potential fraud in some of its PPP loans, she said, and has referred those cases to the SBA and to unnamed law enforcement agencies. Kabbage has also noted that some loans appearing in the SBA’s data were never actually funded.

If any alleged fraud is discovered on how the proceeds are spent – as happened in the case of an Atlanta reality TV star accused of using funds from a $2 million PPP loan to buy jewelry, lease a Rolls Royce and make child support payments – the money has to be recovered on the back end. An SBA spokeswoman declined to say how the agency will attempt to claw back the money.

It’s not a given that SBA will guarantee loans if it turns out that fraud was involved. The agency could reject the loan and the bank would be left holding it on its books, Klingler, the banking attorney, said. If the loan then goes delinquent, the bank would be on the hook for losses.

Banks also could be sued by business owners who said they were unfairly rejected for a PPP loan, Klingler said. Conversely, banks could suffer a public-relations black eye if they issued a loan to a company that shouldn’t have gotten one.

“The message to banks from the SBA was, ‘Lend your money and trust us, we will make you whole,‘” Klingler said. “There’s a lot of skepticism from bankers on that. The government has told banks that kind of thing before and didn’t live up to it.”

PPP bailout loans in Georgia, by the numbers

123 – Businesses reported as receiving loans ranging from $5 million to $10 million

620 – Businesses reported as receiving loans ranging from $2 million to $5 million

132,949 – Businesses that received loans of less than $150,000

1,444,632 – Total jobs purportedly retained

These numbers will grow before summer is up. Congress has voted to extend the Paycheck Protection Program until Aug. 8, the new deadline to apply.

The federal government still has about $130 billion left to lend. On June 5, President Trump signed the PPP Flexibility Act, which made loan forgiveness easier, lowering the threshold on payroll spending from 75% to 60%.

Also, for loans issued after June 1, the loan portions that aren’t forgiven must be paid back in five years instead of two, at an interest rate of 1%.

Georgia’s top 5 lenders, by volume of loans

Bank of America, National Association – 12,062

Kabbage Inc. – 10,340

Truist Bank, d/b/a Branch Banking & Trust Co. – 10,302

Wells Fargo Bank, National Association – 8,710

Synovus Bank – 7,564

Source: U.S. Small Business Administration