AUSTIN (KXAN) — KXAN first reported that a Texas congressional campaign directly received funds intended to help struggling businesses during the pandemic — now Texas Republican Sen. John Cornyn says he’s requesting an audit of the Small Business Administration’s Paycheck Protection Program.
KXAN first reported on Monday that Dr. Christine Mann’s political committee received a PPP loan for $28,600. Mann is a candidate in the Democratic primary runoff for Texas’ 31st Congressional District.
“I don’t think we ever dreamed that we would be providing financial assistance to political campaigns,” Cornyn said in an interview with KXAN. “What we were trying to do was focus on small businesses and encourage them to try to keep their employees on payroll so that people could continue to earn an income while we work our way through this public health crisis.”
“That was a surprise to me.”
The Small Business Administration does not authorize PPP loans but has the ability to review applications. Instead, borrowers self-certify that they are eligible for the loan which is then distributed by an authorized lender.
A spokesperson for the Mann campaign said that their application was self-certified as a “business.”
Qualifying entities for PPP loans include “any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern” with some additional restrictions.
Mann’s campaign said accountants and the FEC were consulted about the PPP loan, with no objections. The campaign received the PPP loan in May and paid it back, in full, in June.
Chris Gober, a political law attorney who advises campaigns, candidates and political organizations, said he advised clients to stay away from PPP loans.
The Ohio Democratic Party received a PPP loan for $333,867 and the Tennessee Democratic Party received a PPP loan for $5,000, according to FEC records. In April, a federal judge ruled that lobbyists couldn’t receive PPP loans because of SBA rules.
“Those provisions state that a business that a majority of your work is for political activity or lobbying activity then you are specifically excluded from getting a PPP loan,” Gober said.
Rep. Lloyd Doggett (D-Austin) also wants to see an audit of the PPP.
“Certainly, I support an audit of the entire, bungled PPP program, regardless of party or connections. A firm fundraising for Trump’s re-election campaign received a loan of more than $1 million. Getting any accountability for the Trump Administration’s mishandling of PPP has been extraordinarily difficult. Loans were provided to insiders without regard to need while some of the small businesses most in need were ignored. For weeks, the Administration has withheld the names of those helped, and we still can secure no guarantee of enforcement against those who should never have received a dime.”U.S. Representative Lloyd Doggett (D-Austin)
KXAN has requested an interview with the Small Businesses Administration but has not heard back.
An FEC spokesperson said the agency could not comment on any specific matter but said: “An authorized campaign committee of a federal candidate is permitted to receive loans from the candidate as well as other permissible sources such as lending institutions.”
Mann is running against Donna Imam in the Democratic primary runoff for Texas’ 31st Congressional District, vying to face Rep. John Carter in the general election. Election day is July 14.
Christine Mann for Congress and ChristineMann4Congress raised more than $350,000 in this campaign cycle, according to federal campaign finance records.
This is a developing story. KXAN politics reporter John Engel will have a full report tonight at 6 p.m.