Get all the latest news on coronavirus and more delivered daily to your inbox. Sign up here.
Continue Reading Below
Treasury Secretary Steven Mnuchin said Tuesday the federal government will perform a full audit on companies that receive a loan above $2 million from a fund intended to help small businesses survive the coronavirus pandemic.
"Before we forgive these loans, we’ll check every single one over $2 million," Mnuchin told FOX Business' Stuart Varney. "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."
Congress created the Paycheck Protection Program last month as part of the massive stimulus package for businesses with fewer than 500 workers. If companies spend at least 75 percent of the money on maintaining payroll, the government will forgive it.
The loan program, which resumed Monday morning, exhausted its initial $349 billion in funding within 13 days and was heavily criticized for granting loans to big, publicly traded companies — even as small businesses languished.
At least 222 public companies received forgivable loans totaling more than $870 million through the program, according to Washington D.C.-based data analytics firm FactSquared.
That includes $126.4 million received by three public companies overseen by luxury hotelier Monty Bennett. One of the companies, Ashford Hospitality Inc., applied for $76 million in aid in 117 separate loans, according to regulatory filings, making it the top recipient of the money.
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.
The Los Angeles Lakers, the second most-valuable team in the National Basketball Association valued at $4.4 billion at the beginning of 2020, also tapped the fund, receiving a loan for $4.4 million. After the fund evaporated, however, the team announced that it would return the money.
"I’m a big Lakers fan, but I'm enraged they took that loan," Mnuchin said. "I’m glad they paid it back."
The Small Business 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. If borrowers accessed the aid before the Treasury issued the new guidance and repay the entire loan before May 7, 2020, it “will be deemed by the SBA to have made the required certification in good faith.”