Companies returned or canceled more than $30 billion in taxpayer-funded loans obtained through the Paycheck Protection Program, a rescue fund designed to help small businesses weather the coronavirus-induced recession, a senior administration official said Monday.
At the onset, the program was heavily criticized for granting aid to publicly traded companies that had other avenues for relief when the initial $349 billion allocated to the fund evaporated within 13 days — even as small businesses languished.
But the Small Business Administration and Treasury Department, which jointly administer the program, rushed to close the loopholes that allowed multimillion-dollar companies to tap the fund, including auditing any loan worth more than $2 million.
Public companies typically had to disclose in regulatory filings whether or not they had received a loan through the government-aid program. At least 440 public companies received forgivable loans totaling more than $1.39 billion through the program, according to Washington, D.C.-based data analytics firm FactSquared. Of those companies, 69 returned the money, or roughly $436 million.
Notable public companies that returned the virus aid include Shake Shack, Potbelly's and Ruth's Hospitality Group.
It's possible that other businesses returned the forgivable loans because they were worried that confusion around the loan's rules, particularly regarding forgiveness, could leave them on the hook for the money. The program also did not initially take into account that many businesses were unable to open their brick-and-mortar stores due to state and county restrictions.
The data shows the government issued $521 billion in loans, with an average loan size of $107,000. Combined, the aid program supported about 51 million jobs, or roughly 84 percent of all employees working at small businesses, the Treasury Department and Small Business Administration said.
More than half of the money went to employers in five industries. The health care and social assistance industry received 12.9 percent of the money, while 12.7 percent went to professional and technical services; 12.4 percent went to construction; 10.3 percent went to manufacturing; and 8.1 percent went to restaurants, bars, hotels and other food- and hospitality-service employers.
The PPP, a rescue fund established by Congress with the passage of the $2.2 trillion CARES Act at the end of March, reopened to applicants on Monday after Congress voted to extend the aid program through the beginning of August.
Employers with fewer than 500 workers can receive loans of up to $10 million; if at least 60 percent of the money goes toward maintaining payroll, the federal government will forgive the loan in its entirety, essentially transforming the money into a grant. There's roughly $132 billion remaining in the fund.