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Some companies are paying back PPP loans when they could be forgiven


Now we have a story about a group of people who did something many other people might consider foolish. They got loans, sometimes for a lot of money, and paid them back, even though they didn't have to.


We're talking about the Paycheck Protection Program, or PPP for short. And, Sacha, you've been looking into this as part of your reporting work on NPR's investigations team. So you got to know one of those people, and let's listen to you introduce us to him now.

PFEIFFER: Bob Morrill is a lawyer whose office looks mostly like what you'd expect in a traditional law firm - the framed diploma, the grandfather clock. But there's also something odd.

BOB MORRILL: Oh, that's my Tommy Bahama beach chair. It's multicolor. It has sort of Caribbean colors of oranges and reds.

PFEIFFER: It's leftover from COVID lockdown days when Morrill and his co-workers couldn't enter their building for health safety reasons. So when they had to meet, they'd gather outside in the parking lot, BYOC - bring your own chair.

MORRILL: It would look like something out of a mob movie. Like, you'd have a bunch of lawyers with masks on, sitting in these beach chairs talking about business.

PFEIFFER: A comical sight, but a nerve-wracking time financially. Morrill was managing partner then, and his mind swirled with concerns about how the pandemic might affect business.

MORRILL: Are revenues going to drop off? By how much are they going to drop off? How soon are they going to drop off?

PFEIFFER: So his firm, Gilmore Rees & Carlson of Wellesley, Mass., turned to the federal government's Paycheck Protection Program, which gave loans to small businesses during COVID.

MORRILL: We applied for and received a loan for $700,000.

PFEIFFER: Now, NPR has done many stories about how the $800 billion Paycheck Protection Program was rampant with fraud and waste. By one estimate, fraudsters may have gotten $64 billion. Billions more went to businesses that didn't need it and to companies owned by wealthy celebrities, including Khloe Kardashian and Tom Brady. Yet the vast majority of PPP loans have been forgiven - 96% of all the money. But Bob Morrill's law firm is a very different story. Back at his office, he shows me a pile of paper.

MORRILL: And this stack here. I have our application for the PPP loan, and I have the loan paid in full. It was $694,930, and then we actually paid interest of about $5,600 on that amount.

PFEIFFER: His firm repaid its entire loan, even though it would have been eligible for forgiveness according to the program's rules. So why did it repay it? Morrill says it's simple. The business was able to survive without the money, so keeping it would have felt wrong.

MORRILL: The analogy that comes to mind to me is, like, you're throwing life preservers to people on a boat in a storm. And if they don't need it, when the boat pulls back into the harbor, they ought to give the life preservers back.

PFEIFFER: And the pandemic turned out to be not that stormy for his business. Morrill says the firm never had to lay anyone off or reduce their hours or cut their pay. It even made money.

MORRILL: Was it as much profit as we would have had but for COVID? No, but that's the risk of running a business. You have good years and bad years.

PFEIFFER: So the law firm returned the loan.

ERIC ZWICK: No, I haven't heard about a lot of cases of that happening.

PFEIFFER: University of Chicago finance professor Eric Zwick studied the Paycheck Protection Program. Some companies repaid their loans because they didn't meet forgiveness criteria. But to be eligible for forgiveness and still pay it back on ethical grounds - Zwick says that's rare.

ZWICK: I would expect that particular reason to be fairly uncommon, but it's interesting that there are some cases that you found, and I think probably more interesting that there are so few.

PFEIFFER: Very few. NPR analyzed data from the Small Business Administration and found of the 11.5 million PPP loans issued, only about 73,000 were repaid without requesting forgiveness - just sixth-tenths of a percent. That includes some large companies, like Shake Shack and the LA Lakers, that were pressured to return the money after public uproar. The SBA says it also includes companies that thought repaying would be easier than applying for forgiveness or that thought they weren't eligible for forgiveness. But repaying a forgivable loan out of benevolence is a foreign concept to many experts.


UNIDENTIFIED PERSON #1: Hello, everyone. Welcome to what promises to be a fascinating conversation on the Paycheck Protection Program.

PFEIFFER: Listen to an exchange at this panel I attended at Harvard University last year. Prominent economist Glenn Hubbard, former dean of Columbia University's business school, sounds baffled by this question from an audience member.


UNIDENTIFIED PERSON #2: Were any of those loans repaid?

GLENN HUBBARD: Essentially, they weren't. That wasn't - the point was, effectively, to give away the money. So the only way you would repay is if you violated some of the tenets of it. But, no, you wouldn't expect it to be repaid.

PFEIFFER: NPR reached out to numerous companies that repaid their loans without requesting forgiveness. Most wouldn't talk, so it's unclear why they made that decision. The president of one bank that processed PPP loans, Bert Talerman of Cape Cod Five Cents Savings Bank, says some may have repaid the money to avoid a potential government audit. But...

BERT TALERMAN: If someone had that principle that this was intended for someone who needed it, I didn't need it, therefore I'm paying it back, good for you.

PFEIFFER: Although, truthfully, I was skeptical of Bob Morrill's explanation for why his law firm repaid its loan, so I pushed him on possible other reasons. Did it think keeping the money could have hurt its reputation? Morrill said no. He assumes most people wouldn't even have known his firm got a loan. Could it have had negative tax consequences? No, because PPP loans are not taxable. Was he aware forgiveness was easy? Morrill said yes. In fact, he said repayment was difficult.

MORRILL: It was more of an effort than I would have anticipated to pay it back. Trying to pay it back was kind of a headache, you know? So the whole system was set up for everything to be forgiven.

PFEIFFER: You're a very tiny minority. Most people I've interviewed had the expectation that it was going to be forgiven and absolutely chose to get it forgiven.


PFEIFFER: So I'm sure there are listeners thinking, this guy sounds very Pollyanna.

MORRILL: (Laughter) Maybe I'm a Boy Scout. I don't know. I don't know. I just - it just - it was the right thing to do. I don't know what to tell you. I believe in America. I believe in capitalism. And I don't see it as my place to have my business subsidized by the government if I don't need it.

PFEIFFER: Yet countless businesses that thrived during COVID kept their PPP loans, like many construction and manufacturing and teleworking software firms. Morrill says it bothers him that more companies didn't give the money back.

MORRILL: I don't want to sound self-righteous, but the people at the higher wealth end of the spectrum that kept it, that didn't need it, yeah, I got a problem with that.

PFEIFFER: And he wishes the government had appealed to companies to return money they didn't need.

MORRILL: I mean, I worry sometimes in Washington money is not real. It's like snowflakes in the storm. They just throw it out there. Who cares? But at the end of the day, someone has to pay this back, right? My kids have to pay it back. My grandkids will be paying it back.

PFEIFFER: Because all those Paycheck Protection Program loans that were forgiven have contributed to the national debt, which is now $34 trillion. Sacha Pfeiffer, NPR News.


NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Sacha Pfeiffer is a correspondent for NPR's Investigations team and an occasional guest host for some of NPR's national shows.