Treasury gives big public companies until May 7 to return loans meant for small businesses
From: Marketwatch April 23, 2020
The Treasury Department on Thursday followed up on its pledge to get money back from big public companies that received loans meant for small businesses hurt by the coronavirus crisis, with officials issuing guidance that gives the large enterprises a May 7 deadline to return the aid.
More than 100 publicly traded companies have received Paycheck Protection Program loans intended for small businesses, which reported widespread problems in getting the assistance. The program also quickly ran through its initial allocation of $350 billion but was on track to get replenished this week.
In a guidance document issued on Thursday, the Treasury Department noted that PPP borrowers had to certify to the Small Business Administration that the current economic uncertainty made their loan request necessary to support ongoing operations.
“It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith,” the department’s guidance added.
“Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020, will be deemed by SBA to have made the required certification in good faith.”
The give-backs are underway. Ruth’s Chris Steak House parent Ruth’s Hospitality Group Inc. RUTH, -4.42% , which has reported getting $20 million in PPP loans, said Thursday that it was returning the aid, and metalworking company DMC Global Inc. BOOM, -3.88% said it had paid back a $6.7 million PPP loan.
Japanese restaurant chain Kura Sushi USA Inc. KRUS, -0.98% said Wednesday that it was giving back its $6 million PPP loan, and burger chain Shake Shack Inc. SHAK, -1.21% on Monday said it was returning its $10 million PPP loan.
On Tuesday, Treasury Secretary Steven Mnuchin said the loan program was not intended to help “big public companies that have access to capital.”
“We’re going to put up very clear guidance so that people understand what the certification is, what it means if you’re a big company,” Mnuchin also said on Tuesday. “To the extent these companies didn’t understand this and they repay loans, that will be OK, and if not, there will be potentially other consequences.”