Pandemic Relief for Small Businesses: The Impact of Government Loans and the Barstool Fund

By: Zhuo Zhao

After hitting the one-year mark on the COVID-19 pandemic, businesses are still struggling economically to recover from the yearlong loss of income and the U.S. government is still struggling to effectively assist struggling businesses.  The Paycheck Protection Program (“PPP”) is a “loan designed to provide a direct incentive for small businesses to keep their workers on payroll.”[1]  Borrowers have the additional incentive to apply to PPP loan forgiveness if certain qualifications are met.[2]  PPP loans are available to any small business owners that meet extensive eligibility requirements.[3]

PPP loans have been misused by many; some individuals believe it is “free money.”[4]  In July 2020, after the government granted PPP loans to struggling small businesses, a report showed that three quarters of the loans went to private equity backed chains.[5]  Well-known companies, like Texas Toast, have applied for the loan. Texas Toast obtained ten million dollars to pay 250 employees, with investigators finding out after that there was no record of the employee’s wages.[6]  Since the PPP’s inception, around 100 individuals have been charged with PPP fraud under the False Claims Act (“FCA”) and other federal statutes.[7]  “Collectively, those charged are alleged to have stolen more than $175 million from the PPP, while actual small business revenue losses have topped $70 million.”[8]  Statistics show that the U.S. Small Business Administration approved well over a million PPP loans from January 2021 to February 2021.[9]

Unfortunately, some small businesses do not meet the eligibility requirements and cannot receive loans from the government.[10]  However, there are alternative options.  After seeing small businesses struggle during the pandemic, Barstool Sports founder, Dave Portnoy, created the Barstool Fund to support businesses with “a proven track record of success and owners who kept most of their employees on during the pandemic.”[11]  Since its creation in March 2021, the Barstool Fund has raised over thirty-seven million dollars and has supported 332 businesses.[12]  The process for applying to the Barstool Fund is simple:  (1) fill out an application online with general information, and (2) e-mail the Fund your business’s story.[13]  The Barstool Fund allows companies to apply for assistance with “needs such as rent or tax payments by sharing their stories by email, so long as they have continued to pay their employees throughout the pandemic.”[14]  

In comparison to the U.S. Small Business Administration’s PPP Loans, the Barstool Fund has significantly less money and applications.  Because of the significant decrease in applications and the personalized nature of the Barstool Fund application, fraud is more easily detected.  When millions of people are applying for PPP loans through the U.S. Small Business Administration for tens or hundreds of thousands of dollars, fraud can slip through the cracks of the system.  While the government has reported numerous fraud incidents, as of March 2021, there are no reports of misuse of funds by individuals who received money from the Barstool Fund.  

The government’s organization of the PPP creates a precedent for the process of government loans to small businesses during future emergency situations.  As such, it is important for the government to identify which small businesses are most in need and are most likely to spend funds wisely.  While government regulated PPP has struggled with the misuse and abuse of funds, the Barstool Fund, which has significantly less money and resources, has not.  The government’s attempt to grant as many PPP loans as possible, in the shortest amount of time possible, has revealed how problematic that system is and how it leads to abuse of funds.  The Barstool Fund has demonstrated that providing loans to struggling small businesses can be more efficiently implemented than what the government is doing with eligibility requirements and intensive applications, with better results.  


[1] Paycheck Protection Program, U.S. Small Bus. Admin., https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program (last visited Mar. 30, 2021).

[2] See id. (explaining that in order to qualify for loan forgiveness, applicants must maintain employee compensation levels, spend the loan on payroll costs or other approved expenses, and use at least sixty percent of the proceeds on payroll costs).

[3] Stephanie O’Rourk, Paycheck Protection Program (PPP): Recent Treasury Guidance on Eligibility and More, CohnReznick (Jun. 23, 2020), https://www.cohnreznick.com/insights/treasury-releases-guidance-on-ppp-eligibility-for-businesses-owned-by-large-companies.

[4] Bruce Brumberg, Federal Charges of PPP Loan Fraud are here to Remind You These Loans are Not “Free Money,” Forbes (May 14, 2020), https://www.forbes.com/sites/brucebrumberg/2020/05/14/federal-charges-of-ppp-loan-fraud-are-here-to-remind-you-these-loans-are-not-free-money/?sh=7bef06c1ed53.

[5] Dante, ¾ of SBA Loans Meant to Help Struggling Small Businesses Went to Private Equity Backed Chains, and Members of Congress, Newly Released Info Shows. Know Who Didn’t Take Any Federal Money? Dave Portnoy, Founder of Barstool Sports, Barstool Sports (July 7, 2020), https://www.barstoolsports.com/blog/2639330/34-of-sba-loans-meant-to-help-struggling-small-businesses-went-to-private-equity-backed-chains-and-members-of-congress-newly-released-info-shows-know-who-didnt-take-any-federal-money-dave-por; Lauren Hirsch and Jacob Pramuk, Trump Administration Releases List of Companies that Received Most Money from Small Business Bailout Loans, CNBC (July 6, 2020), https://www.cnbc.com/2020/07/06/coronavirus-stimulus-list-of-ppp-small-business-loan-recipients-released.html.

[6] Id. 

[7] Robert L. Peabody & Nicholas A. Plinio, Paycheck Protection Program: Government Enforcement, Oversight, The Nat’l L. R. (Mar. 5, 2021), https://www.natlawreview.com/article/paycheck-protection-program-government-enforcement-oversight.

[8] Id. 

[9] Jeff Drew, SBA Announces PPP Process Changes, J. of Accountancy, (Feb. 10, 2021), https://www.journalofaccountancy.com/news/2021/feb/sba-ppp-application-review-process-changes.html.

[10] First Draw PPP, U.S. Small Bus. Admin., https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program/first-draw-ppp-loan (last visited March 31, 2021) (listing the eligibility requirement criteria qualifies to “sole proprietors, independent contractors, and self-employed persons; any small business concern that meets SBA’s size standards (either the industry size standard or the alternative size standard); any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of 500 employees, or that meets the SBA industry size standard of more than 500; any business with a NAICS code that begins with seventy-two (accommodations and food services) that have more than one physical location and employs less than 500 per location”). 

[11] Shaina Humphries, Barstool Fund Raises Millions for Struggling Small Businesses During COVID-19 Pandemic, Fox 29 (Jan. 22, 2021), https://www.fox29.com/news/barstool-fund-raises-millions-for-struggling-small-businesses-during-covid-19-pandemic.

[12] The Barstool Fund, Barstool Sports, https://www.barstoolsports.com/the-barstool-fund (last visited Mar. 30, 2021).

[13] Id.

[14] Thomas Barabbi, Barstool’s Dave Portnoy Launches $500K Fund to Aid Small Businesses Hit by Pandemic, Fox Business (Dec. 17, 2020), https://www.foxbusiness.com/small-business/barstool-fund-dave-portnoy-small-business-coronavirus-pandemic.

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