By Ellen Cans
The federal government launched the Paycheck Protection Program to help small businesses struggling due to the ensuing shutdown caused by the novel coronavirus. Large public companies, however, were given $1.3 billion in loans from that federal program. As reported by the NY Post, of the 424 public firms which admitted to receiving the funds, only 68 of those companies have promised to return the funds, as of early Monday morning. As per regulatory filings compiled by FactSquared, a data-analysis company, a whopping 84 percent or 356 of the companies are planning on keeping the federal funds meant to keep mom-and-pop businesses afloat.
The Trump administration has pledged to clamp down on abuse of the $659 billion PPP program. Officials had given the large companies until the deadline of May 18 to payback the loans without facing further scrutiny. Now, the US Small Business Administration has vowed to take a closer look at all PPP loans that were over $2 million, to confirm that the guidelines were met. The federal government will try to get outstanding loan balances returned from companies that already had the funds they needed for payroll and overhead costs. Officials said, that companies that got less than $2 million will not be scrutinized because they are “generally less likely to have had access to adequate sources of liquidity in the current economic environment”.
Some of the big firms who received and seem to be keeping the loans include: chic restaurant operator ONE Group Hospitality, which received $18.3 million; Hallador Energy, a coal firm which received $10 million; and high-end hotel company Sotherly Hotels, which got almost $10.4 million, according to the FactSquared data.
The first round of the federal Paycheck Protection Program has been called an overall disaster, with the initial $349 billion budget running out after the first two weeks. Large chains including Shake Shack, and Ruth’s Chris Steak House drew ample criticism for getting payouts from the program while small businesses were left empty handed. Those two companies who had received $10 million and $20 million respectively, have already voluntarily returned the funds last month. The SBA rolled out a second round of PPP loans, with an additional $310 billion in funding. On May 19, the SBA said that the second round still has $135.7 billion in funds available for takers. The average size of the loans as of last week was $118,000, even though most of the loans distributed were for $50,000 and less.