Free Consultation: 858.450.1040 Payment | Client Login

MENUMENU
  • EDD
  • IRS
    • IRS Notices – What They Mean
  • ABOUT US
    • PRACTICE AREAS
    • CONTACT US
  • TAX LAW & EDD RESOURCES
    • EDD & IRS AUDITS
    • CRIMINAL TAX
    • SAN DIEGO TAX ATTORNEY
    • Orange County Tax Attorney Services
    • TAX BALANCE
    • INNOCENT SPOUSE RELIEF
    • OTHER TAX LAW MATTERS
    • SALES TAX AUDITS
    • UNFILED TAX RETURNS
    • OFFERS IN COMPROMISE
    • CALIFORNIA INCOME TAXES
    • INTERNATIONAL TAX
    • TAX COLLECTIONS
    • CORPORATE | BUSINESS TAX
    • PAYROLL TAX AUDITS
    • TAX LEIN
    • FAQs
  • Blog
  • SBA Loan Resources
    • SBA Criminal Defense
    • SBA PPP Assessment
    • FAQs
Home > Blog > Will SBA Relief Funds Meant for Small Businesses be Returned?

Will SBA Relief Funds Meant for Small Businesses be Returned?

July 13, 2020

Small businesses continue to struggle to acquire SBA PPP funds, as a few larger companies refuse to return the funds they have received. Though these larger publicly traded companies could face severe consequences, the threat is not causing any movement towards these companies returning their funds. While the Trump Administration and Treasury Secretary, Steven Mnuchin, are working to encourage larger companies to return the funds, there is some concern that it will not be enough to motivate these larger businesses...

BY JASON LEMON 

A new analysis shows that the overwhelming majority of publicly listed companies that received coronavirus stimulus loans from the federal government, which were intended for struggling small businesses, do not plan on returning the funds.

The study was conducted by Reuters, which analyzed data from the market research firm FactSquared. The news organization found that as of May 22, only 68 out of 424 public companies had returned the funds, with those declining to do so and claiming that they need the funds to maintain operations.

Companies who took the loans despite having enough resources to get through the financial crisis, were required to return the money by May 18 without facing any penalties. But the Reuters analysis found that at least 76 companies who did not return the loans had "enough cash and cash equivalents to cover operating costs until at least June."

Reports began circulating in April that many large companies had received millions in loans through the program, despite the intent being to prop up struggling small businesses. President Donald Trump and Treasury Secretary Steven Mnuchin have both been critical of large companies taking advantage of the program and urged them to return the funds.

But the Trump administration has faced significant criticism for not doing enough to ensure the loans are directed to businesses that need the funds the most. Legal experts have also said it is unlikely that companies that exploited the program could face serious repercussions.

"I don't see anybody being convicted for this, honestly," Scott Pearson, a partner at Manatt, Phelps & Phillips told CNBC. "What will scare people away is the threat of being accused. The suggestion there is criminal liability for a company that has a good argument that they were eligible for these loans based on the structure of the CARES Act is ludicrous."

Some Democratic lawmakers have urged greater oversight of the funds approved by Congress. Some large companies that received millions in assistance--including Ruth's Chris Steak House, Shake Shack, and the Fiesta Restaurant Group--have returned the funds.

"Unfortunately, we know that unscrupulous business owners have been applying for and taking funds that others have a much more urgent need for," Representative Katie Porter of California said in an opinion article published by NBC News on May 12.

"As a result, our smallest, most vulnerable businesses are losing out and at risk of disappearing," the congresswoman warned.

Filed Under: Blog, COVID-19, News Tagged With: Accounting, CARES, COVID-19, Economy, Tax Preparation

Archives

Questions About
Tax Audit/Controversies?

A representative will be in contact within 1 business day
PRIVACY POLICY

Get Monthly Updates on Important Tax Law Matters



FOLLOW US ON:

Milikowsky Tax Law is located at: 4250 Executive Square, Ste. 650, La Jolla, CA 92037
o. (858) 450-1040 | m. (858) 212-0542 |
Privacy Policy

DISCLAIMER:
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

Milikowsky Tax Law © All Rights Reserved. Clear1099.com | Cal1099.com | California1099.com © All Rights Reserved.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.

SAVE & ACCEPT