More than 25,000 Hawaii businesses and nonprofit organizations received forgivable federal Paycheck Protection Program loans earlier this year — but at least a few shouldn’t have.

Some private social clubs in Hawaii with golf, yacht, pool and dining facilities established to benefit members received PPP loans despite not being eligible.

These loans up to $10 million were made available in April to help small businesses primarily pay workers along with a smaller amount of expenses including rent and utilities to offset impacts from the COVID-19 pandemic.

The U.S. Small Business Administration established PPP at the direction of Congress under rules that excluded social clubs with 501(c)7 nonprofit designations while allowing participation by 501(c)3 charitable organizations that can include hospitals, schools and churches.

Yet banks, which earned fees from approving and issuing PPP loans guaranteed by SBA, granted such loans totaling at least $1 million to ineligible social clubs in Hawaii, and these loans can become taxpayer expenses under forgiveness provisions.

According to SBA data, at least three local 501(c)7 social clubs — Hilo Yacht Club, Lahaina Yacht Club and Mid-Pacific Country Club — received PPP loans of $150,000 to $1 million.

SBA won’t disclose names of entities that received PPP loans of less than $150,000, so it isn’t possible to publicly see whether more improper loans were made.

The U.S. Government Accountability Office has raised concerns about PPP being vulnerable to eligibility circumvention and fraud because the SBA allowed lenders to rely on borrower certifications to determine eligibility with minimal underwriting.

“GAO recommends that SBA develop and implement plans to identify and respond to risks in PPP to ensure program integrity, achieve program effectiveness, and address potential fraud,” the federal agency said in a June 25 report.

SBA intends to review loans over $2 million to confirm eligibility after a borrower applies for loan forgiveness, and can decide to review any PPP loan.

“For a PPP loan of any size, SBA may undertake a review at any time in SBA’s discretion,” the agency said in a May guidance document. SBA also can have loan forgiveness denied to ineligible borrowers.

SBA spokeswoman Cecelia Taylor confirmed that 501(c)7 nonprofits aren’t eligible for PPP, but said the agency does not comment on individual borrowers.

Taylor also said that any fraud, abuse or waste in SBA loan programs isn’t tolerated and can be reported anonymously to SBA’s Office of Inspector General.

In Hawaii, 25,097 businesses and nonprofits received nearly $2.5 billion in PPP loans through Aug. 8. Of these loans, 129 were over $2 million.

Businesses and nonprofit entities were under a lot of pressure to quickly comprehend “interim final” SBA rules for PPP loans that were awarded on a first-come, first-served basis and ran out quickly in April before a second round of funding was added.

Jim Swieter, general manager of Mid-Pacific Country Club, said the members-only golf club in Lanikai relied on First Hawaiian Bank to ensure eligibility for an $830,000 loan approved April 15.

“We confirmed that multiple times,” he said.

Swieter also said that in his view the club meets the spirit and intent of PPP because the loan was used to preserve pay for 118 employees, including 65 who were furloughed in March and otherwise would have sought unemployment benefits.

“We were able to bring people back to work and pay them,” he said. “It wasn’t like the club made out on it.”

The club has about 1,000 members, including former President Barack Obama, who in recent years have paid $1,000 to become a member, which is far below the club’s published initiation fee. Monthly dues are $625.

Swieter said unlike more prestigious social clubs in Hawaii, Mid-Pac isn’t well off even though it offers membership by invitation only. He said the club, established in 1926, has struggled financially for nine decades, in part because it’s in Windward Oahu and leases its land from Kamehameha Schools.

According to a publicly available 2017 tax return, the club’s expenses exceeded revenues by $191,670 that year and $1.15 million the year before.

“We’re kind of the red-headed stepchild of private country clubs,” Swieter said.

Still, SBA determined that PPP loans shouldn’t go to such clubs that don’t pay taxes on their main revenue source that solely benefits members.

First Hawaiian Bank, which also made the PPP loan to Hilo Yacht Club, did not provide a comment on the subject after being asked about it over a week ago by the Honolulu Star-Advertiser.

Fees paid to banks on PPP loans amount to a portion of loan values: 5% for loans under $350,000, 3% for loans ranging from $350,000 to under $2 million, and 1% for loans of $2 million to $10 million.

On Mid-Pac’s $830,000 loan, the fee amounted to $24,900.

Hilo Yacht Club, a social club established in 1919, reported preserving 36 jobs with a loan between $150,000 and $350,000 but did not respond to a message seeking comment.

Lahaina Yacht Club, which was established in 1965, also received a loan between $150,000 and $350,000. SBA data did not include the number of jobs preserved. The club did not respond to a request for comment.

Bank of Hawaii, which made the Lahaina Yacht Club loan, did not provide a comment on the subject after being asked about it over a week ago.

Another loan recipient listed in the PPP loan data as being a nonprofit is Pukalani Country Club on Maui. However, this golf course is a for-profit business open to the general public.

At the same time, some members-only social clubs operating as for-profit businesses obtained PPP loans as permitted under SBA rules, including the Honolulu Country Club golf course at Salt Lake and The Club at Hokuli‘a, where residential property owners in a gated Hawaii island community can access golf, fine dining, tennis and yoga.

More than 250 eligible nonprofits in Hawaii received PPP loans, including schools, health care facilities, churches and other charitable organizations.

In addition to private social clubs, nonprofits that aren’t eligible for PPP loans include homeowner associations, labor unions, advocacy groups and trade associations.

There have been efforts to change PPP loan regulations so that all nonprofits qualify, including a bill in Congress supported by the National Club Association. The U.S. House of Representatives passed HR 6800, which would make such a change among other things, but the Senate has not approved the measure.