Treasury Secretary Steve Mnuchin expressed his disappointment or anger with large companies that applied for and were granted Payroll Protection Program (PPP) loans during a CNBC interview Tuesday morning. His comments came following numerous reports of larger companies and organizations being granted PPP loans. He did voice his appreciation for the PPP funds returned to the government by Shake Shack, Ruth Chris Steakhouses, and the NBA’s Los Angeles Lakers after those organizations received countless criticisms over social media and then from Secretary Mnuchin himself. The fact of the matter is that banks were instructed NOTto apply normal underwriting practices when processing PPP loan applications. Instead, they were asked to push through the applications from small businesses ASAP. As it pertains to larger companies, Secretary Mnuchin stated that if they have access to other sources of liquidity or have not been appreciably (economically) impacted by the Coronavirus outbreak, that those companies should not take out PPP loans.
Small businesses support approximately 50% of the U.S. economy. It is for that reason that the government wanted to provide them with these relief funds associated with the PPP provisions within the CARES Act. For the most part the PPP relief initiative has been a success with more than one million small businesses with 10 employees or less having been approved thus far. Secretary Mnuchin also reported that more than 30million U.S. workers had benefited from the PPP loans already issued, however with the recent injection of $310billion more in PPP funding, he expects that number to eventually exceed 60 million workers.
Also, the Secretary announced that any company or organization that was issued a PPP loan of $2million or more, should expect a more onerous and detailed audit process when requesting that their PPP loan be “forgiven”. He stated that loans smaller than $2million will have a far less cumbersome or detailed audit process to determine their worthiness for loan forgiveness (basically converting the loan into a grant).
As we acquire new information and updates concerning the PPP loan program, we will continue to update it here.
