Over 40 companies to return PPP funds after Mnuchin threatens legal action
More than 40 publicly traded companies said they will return loans obtained through the Paycheck Protection Program (PPP) after Treasury Secretary Steven Mnuchin warned of legal ramifications if they don’t.
The analytics firm FactSquared reported that 42 public companies have agreed to return money they received through the PPP, according to The Associated Press. The firms were awarded a total of $337.1 million in loans.
A recent AP investigation found that at least 147 publicly traded companies, some with market values exceeding $100 million, received loans totaling $555 million.
The PPP was designed by Congress to provide small businesses with forgivable loans to cover payroll, rent and other essential costs during the pandemic. However, dozens of publicly traded companies, which have better access to capital, received millions in loans while many smaller businesses were unable to access funds.
Mnuchin has given those large corporations until May 14 to return the money without penalty.
“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,” Mnuchin told Fox Business in an interview.
The Small Business Administration added that it would audit loans over $2 million.
Large companies that have already returned the loans include Shake Shack, Ruth’s Chris Steak House, Potbelly Sandwich Shop and Ashford Hospitality Group.
Some legal experts have questioned Mnuchin’s authority in warning of prosecution. New York University Law School professor Stephen Gillers told the AP that it “isn’t a promising route.”
“Any prosecution would have to prove that the recipients understood what the government was really asking with an ambiguous question and intentionally gave a misleading answer,” Gillers said.
Rep. Nydia Velázquez (D-N.Y.), head of the House Small Business Committee, said the Trump administration should take some of the blame for larger companies accessing the funds.
“It doesn’t excuse that poor implementation and sloppy rule making likely allowed bad loans to be lent, depriving deserving small businesses of help,” she told the AP.