The United States will audit government-backed loans intended to relieve small businesses hit by the coronavirus to ensure they weren't taken out by large companies, Treasury Secretary Steven Mnuchin said Tuesday.
The Paycheck Protection Program (PPP) was part of a $2.2 trillion stimulus package passed by Congress late in March to blunt the pandemic's impact on the economy, and is supposed to lend money to businesses with fewer than 500 employees.
But the initial $349 billion allocated was exhausted in less than two weeks, and news that large companies like upscale burger chain Shake Shack and the owners of the Ruth's Chris steak houses chain took money from the program sparked outrage.
Speaking on CNBC, Mnuchin said the Small Business Administration (SBA) would be reviewing the loans, which convert to grants if companies maintain their employees or rehire laid-off workers by June 30, and use three-quarters of it on wages.
"For any loan over $2 million, the SBA will be doing a full review of that loan before there is loan forgiveness, so we will make sure that what was the intent for taxpayers was fulfilled here," Mnuchin said.
Large companies who certified that they needed the loans could be criminally liable, Mnuchin said.
"This was a program designed for small businesses. It was not a program designed for public companies that had liquidity," he said.
A new relief measure signed by President Donald Trump last week would pump another $320 billion into the PPP, which the government says has protected 30 million jobs.
It also provides $75 billion for hospitals, $25 billion to expand virus testing and $60 billion in disaster recovery loans and grants.
However it doesn't include money for state and local governments, which is being considered as part of a future stimulus measure.
Speaking later in the day on Fox Business Network, Mnuchin said the administration wanted the money narrowly tailored to dealing with the virus.
"It's very clear that anything that Congress does is not going to have a bailout of pre-coronavirus issues," he said. "States that were mismanaged beforehand are not going to get a federal bailout."
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