Mnuchin Warns Of ‘Criminal Liability’ For Public Firms Taking Small Biz Loans
The federal government plans to audit any company taking out
more than $2 million from the small business loan program, Treasury
Secretary Steven Mnuchin said in a pair of interviews on Tuesday, adding
that large corporations that wrongfully claimed the money could be
subject to “criminal liability.”
KEY FACTS
The government plans to conduct a full audit of any small business loan over $2 million, Mnuchin said, in a bid to deter public companies with access to capital markets from the latest round of stimulus.
“This was a program designed for small businesses,” he told CNBC. “It was not a program that was designed for public companies that had liquidity.”
Large companies that don’t
meet the requirements will not have their loans forgiven and could be
subject to “criminal liability” if they don’t repay the money, Mnuchin told Fox News.
The Paycheck Protection Program, which provides emergency small business funding, has faced backlash
after several large corporations disclosed they had taken out loans
that were intended for smaller companies with fewer than 500 employees.
Several public companies took PPP loans but have since said they would return the money,
including: Ruth’s Hospitality Group, owner of Ruth’s Chris Steak House,
took a $20 million loan, AutoNation took a $77 million loan and the Los
Angeles Lakers even took a $4.6 million loan.
Mnuchin said that he was “outraged” that a
sports team like the Lakers had taken a loan, before adding that he was
glad to see them pay it back.
Crucial quote
“We’re not going to be able to check all the loans before they go out
the door because there’s over 26,000 of these loans, but before we
forgive these loans, we’ll check every single one over $2 million,”
Mnuchin pledged
on Tuesday. “I encourage everybody to look at this and pay back these
loans now so we can recycle the money if you made a mistake.”
Crucial statistic
More than 220 public companies have applied for at least $870 million in small business loans, according to data analytics firm FactSquared.
Key background
Under the $2.2 trillion CARES Act, The Paycheck Protection Program
was originally allocated $349 billion for emergency small business
loans, but that funding was quickly exhausted amid overwhelming demand
that has often caused glitches in the system. Despite weeks of controversy around the PPP, another $310 billion was injected into the program thanks to the latest $484 billion coronavirus relief bill passed last week.
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