Most of the publicly traded companies that got approved for loans through the Paycheck Protection Program during the first round of applications have not yet returned the money they received, Reuters reported on Sunday.
The Paycheck Protection Program (PPP) is a federally funded program administered by the Small Business Administration (SBA) that was created to give loans to small businesses so they wouldn’t go under during the coronavirus pandemic.
Applications for the loan program opened early in April, and within weeks, the program was out of funding. The SBA shut down the application process saying that they didn’t even have enough funds to cover the applications that had already been submitted.
Soon after the program ran out of funding, it was discovered that several large, publicly traded companies had received money from the loan program. According to Reuters, major restaurant chains, universities, and even a major sports team were among the big businesses that received loans from the PPP. A total of 424 publicly traded companies received loans through the program, which added up to $1.35 billion.
Though the program was intended to help out businesses that were in danger of imminently going under, 76 of the big businesses that got loans had enough money to cover their costs through June, Reuters reported. Some of these companies that were not in imminent danger of going under received as much as $2 million from the PPP.
Do you own a small business, or know someone who owns a small business?
You’ll want to hear my conversation with local banker Mike Booker, who has been helping folks apply for Paycheck Protection Program loans throughout this pandemic. pic.twitter.com/oPwlPEl6Xl
— Mike Espy (@MikeEspyMS) May 23, 2020
When it was discovered how many large businesses had cashed in on the PPP, the Treasury Department ordered big businesses to return the money they got from the loans by May 18. Those who returned the money by the deadline would not face any sanctions.
The date has now come and gone, and according to Reuters, 80 percent of the companies have not yet returned the money they received from the loans. They also have not indicated whether they intend to return the money.
According to Reuters, only 68 big businesses have returned the money they received. A total of $435.8 million was returned by these companies.
The Paycheck Protection Program was widely criticized for the oversight that led to publicly traded companies getting approved for loans, Reuters reported. Companies applying for the loans were supposed to prove in their applications that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
Many small business owners around the country, as well as politicians, said that the program did not ensure applicants met this requirement.
The Paycheck Protection Program was allocated additional funding at the end of April. For the second round of funding, Congress included language in the bill that prevented big businesses from receiving loans.