In early May, Treasury Secretary Steven Mnuchin announced that all companies who receive loans of more than $2 million in government relief will be subject to full audits from IRS. The Payroll Protection Program allows companies to have their loans forgiven, provided they spend the funds on payroll, benefits, rent, and utilities. The decision was made in order to ensure these loans were justified after large public companies and big chains utilized the funds set aside for small businesses.
Mnuchin said the loans of as much as $10 million meant to keep workers on payrolls under the Paycheck Protection Program were intended for small firms — not public companies and big chains that have access to other means of funding. The SBA will check that borrowers who took large loans properly certified they were needed because of the coronavirus outbreak, he said.
“I want to be very clear it’s the borrowers who have criminal liability if they made this certification and it’s not true,” Mnuchin said Tuesday on CNBC. “We will make sure that what was the intent for taxpayers is fulfilled here.”
More than 220 public companies applied for at least $870 million from the government program, according to the Washington-based data analytics firm FactSquared. Those companies included Auto Nation and Ruth’s Hospitality Group. Ruth’s Hospitality Group, which owns Ruth’s Chris Steak House, took a $20 million PPP loan. AutoNation took a $77 million loan. Both companies have said they would return the money.
The Los Angeles Lakers — the NBA’s second-most valuable team — announced last week that they decided to return the $4.6 million loan secured by the team in March after receiving a large amount of criticism from California citizens, politicians, and small business owners.
The relaunch of the Paycheck Protection Program with an additional $320 billion approved by Congress last week got off to a rocky start Monday, with lenders reporting being shut out of the overwhelmed SBA system amid a flood of loan applications and concerns about when struggling companies will get the funding they need. Mnuchin said the program is getting funding to small businesses with an average loan size of $206,000 so far, despite the attention the large firms that took relief at the expense of mom-and-pop shops are getting.