Cunningham Convinces Wealthy Homeowners to Return $1 Million SBA Loan
WASHINGTON – A wealthy homeowners association on exclusive Kiawah Island in South Carolina is returning a $1 million federal loan intended to help small businesses and nonprofits after being taken to task by Rep. Joe Cunningham, D-S.C.
Cunningham, who is in his first term representing South Carolina’s 1st Congressional District, said it was inappropriate for the Kiawah Island Community Association to take the loan while small businesses across the country were struggling to secure funding through the Small Business Administration’s Paycheck Protection Program.
The association’s acceptance of the federal loan was first revealed by the Post and Courier newspaper in Charleston, S.C. earlier this week.
In the same story, the newspaper also noted that the association had more than $13.6 million in its bank accounts at the end of last year, and had access to a $2.5 million low-interest line of credit.
The Paycheck Protection Program was created as part of Congress’s $2.2 trillion economic relief package in March, and quickly ran out of money due to the extraordinary demand for relief in the face of the coronavirus pandemic.
Congress added an additional $360 million to the program’s coffers in mid-April.
After reading the Post and Courier story, Cunningham, who represents the island’s residents, released a statement in which he said he was “incredibly disappointed” the association “took advantage of a program that was designed to offer a lifeline to struggling small businesses.”
“When Congress approved spending billions of dollars of taxpayer money to help small businesses and their workers survive this crisis, it wasn’t meant for giant corporations with deep pockets or wealthy community associations with millions of dollars in reserve funds,” he added.
Hours after Cunningham’s rebuke, the association’s board voted to send the loan back to the federal government.
In an email to association members, Diana Mezzanotte, the organization’s chairwoman said, “As a community we will survive without the Payroll Protection Loan.”
“Therefore, today the board voted to return the loan because we understand that our sacrifices will be significantly less than small business owners who are struggling to survive,” she said.
In her email, Mezzanotte said the association, which operates as a nonprofit, applied for the funding because it expects to see its revenues from gate fees and property transfers sharply decline this year.
She went on to explain that the association’s reserve funds are intended to pay for maintenance and infrastructure projects “and are not used for ordinary operating expenses and any spending from those reserves will have to be repaid in the future.”
Nevertheless, Mezzanotte apologized to the association’s members, saying the association board regrets “the negative attention this has brought to Kiawah Island.”
As for Cunningham, he took to Twitter to say he was glad to see the Kiawah Island Community Association return the $1 million loan.
“Now this money can go to Lowcountry small businesses and workers who really need the relief,” he said.