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The Treasury Department and Small Business Administration had initially set May 7 as the date for firms that should not have tapped the Paycheck Protection Program to return the money, but pushed the "safe harbor deadline" until May 14. In updated guidance on Thursday, Treasury said the SBA had extended the deadline by four days to May 18.
When Congress created the PPP in the massive economic-relief package signed at the end of March, it directed the low-interest loans to companies with fewer than 500 employees. If at least 75 percent of the money went toward payroll, the federal government would forgive it.
But the program has been heavily criticized since its inception for granting loans to big, publicly traded companies — even as small businesses languished.
Facing mounting outrage, the Trump administration has since tried to close a loophole that allowed wealthy companies to secure loans, tightening the rules and pressuring public companies that tapped the fund to return the money. Companies applying for the relief must now certify that the loans are necessary and prove they can't turn to another source for help.
The agency told businesses to take into account their “current business activity and their ability to access other sources of liquidity” to support their operations before turning to the PPP.
Treasury Secretary Steven Mnuchin told FOX Business that any loan over $2 million will be audited automatically before it's forgiven.
"Before we forgive these loans, we’ll check every single one over $2 million," Mnuchin said. "So anybody that took the money that shouldn’t have taken the money, one it won't be forgiven, and two, they may be subject to criminal liability, which is a big deal."
At least 409 public companies received loans totaling more than $1.3 million through the program, according to Washington D.C.-based data analytics firm FactSquared. So far, 61 have returned the money, roughly $411 million.
Among the companies that have canceled the loans are Shake Shack, Potbelly Corporation and Ruth’s Hospitality Group. That money will be returned to the pot and made available to companies in the program’s second round of funding.