WASHINGTON — The Treasury Department is scrambling to figure how it can recover potentially hundreds of millions of dollars in Paycheck Protection Loans that instead of going to the intended mom-and-pop businesses went to huge companies, including one very-well known employer of Lebron and the Brow.
In the case of the latter—the Los Angeles Lakers—the team has since returned the $4.6-million loan it received. But many others have not, and Treasury Secretary Steven Mnuchin is threatening to hold some “criminally liable” if they do not meet the program’s revised criteria for accepting the funds, which are supposed to help companies of fewer than 500 employees maintain their worker headcount.
No One to Blame but Themselves
But critics say the Treasury Department and the SBA have no one to blame but themselves for billions of dollars that may have missed its mark, as the program was hastily developed and then rushed to deploy the initial $349 billion in funds to the PPP. It is currently disbursing another $310 billion, $60 billion of which has been reserved for smaller institutions, such as credit unions. Even in round II, many have said the rules remain vague.
Mnuchin said the administration plans to audit any company that received more than $2 million. More than 100 companies have disclosed loans of more than $2 million to date, according to the New York Times.
“I never expected in a million years that the Los Angeles Lakers, which I’m a big fan of the team, but I’m not a big fan of the fact that they took a $4.6-million loan,” Mnuchin said during an interview on CNBC. “I think that’s outrageous.”
As CUToday.info has reported, to facilitate the program, the Treasury Department’s guidance required businesses to merely certify, or promise, that they faced “economic uncertainty” and that the loans were “necessary” to support current operations.
Loopholes in Rules
Thanks to loopholes in the rules, numerous big companies, including Shake Shack, Potbelly and AutoNation, all received multi-million PPP loans, and all three have since returned the money.
Mnuchin said the program was not meant for certain companies and Treasury has moved to tighten eligibility requirements. Companies with “substantial market value and access to capital markets” should be ready to demonstrate why they need the money, according to the Treasury Department.
Through April 28, the SBA, which is administering the PPP program, reported more than two-million loans had been processed.