Education and Labor Committee Republican Leader Virginia Foxx (R-NC), Small Business Committee Republican Leader Blaine Luetkemeyer (R-MO), Health, Employment, Labor, and Pensions Subcommittee Republican Leader Rick Allen (R-GA), and Oversight, Investigations, and Regulations Subcommittee Republican Leader Beth Van Duyne (R-TX) issued the following joint statement on the discovery of unions illegally receiving Paycheck Protection Program (PPP) funds:

“It is concerning that PPP funds were distributed to entities other than small businesses and designated non-profit organizations. The illegal entry of at least 226 labor, teachers, and government unions into the Paycheck Protection Program demands an investigation. Ensuring American tax dollars are used responsibly and correctly is essential in our duty to the American people and our small businesses. We hope the SBA will be able to shed some light on this important issue.”

Read key excerpts of the letter below:

“We have recently been made aware of a report from the Freedom Foundation highlighting that PPP loans were made to labor unions. Using data obtained through the Freedom of Information Act, the Freedom Foundation determined that 226 labor, teachers, and government sector unions received $36.7 million in forgivable loans. We understand these loans were made despite the CARES Act’s language specifically targeting PPP loans to small businesses and non-profit organizations—as defined under Section 501(c)(3) and 501(c)(19) of the Federal tax code, respectively. Additionally, 501(c)(12) entities were made eligible for the PPP through administrative action on May 19, 2020. PPP loan eligibility was not extended to unions—Section 501(c)(5) entities—until the law was amended nearly a year later. This information suggests that 501(c)(5) entities entered the program illegally and put money in the hands of affiliates of large organizations—including the AFL-CIO and the International Brotherhood of Teamsters—which netted more than $3.8 million.”

“Given the wide utilization of the program, it is critical to understand if ineligible entities received assistance and how the SBA conducted PPP loan forgiveness reviews for entities classified under Section 501(c)(5) of the Federal tax code (hereinafter referred to as ‘501(c)(5)-classified entities’).”

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