Steven Mnuchin: Those Receiving $2 Million Or More Under PPP To Be Audited
As part of the CARES Act, the US federal government unveiled the Paycheck Protection Program (PPP) as a means of providing immediate cash flow to small businesses battered by the coronavirus pandemic. Then, not even two weeks into the program, 1.6 million small businesses exhausted all of the earmarked $350 billion in available funds, while many more were waiting for approval. However, Treasury Secretary Steven Mnuchin recently provided some insight into how exactly that much money was able to vanish in such a short period of time.
Although there was a backlog in securing additional money for the PPP after the first wave of applications exhausted the fund, the federal government was able to come to a consensus afterall, replenishing the program with a further $320 billion.
In a CNBC interview, Mnuchin revealed that the federal government will be imposing new guidelines in ensuring that those companiesr receiving in excess of $2 million from the PPP would be fully audited before the loan would be forgiven. He further stressed that the purpose of the PPP was for small businesses struggling to meet payroll demands, rather than well-off companies looking for additional corporate welfare. He urged those companies which had made false claims to return the funds before the federal government pursues criminal liability.
Sure enough, it was soon revealed that one of the recipients of the PPP was none other than the Los Angeles Lakers basketball team – probably one of the least essential companies during a global pandemic. The LA Lakers have since shamefully returned the $4.6 million in funding, obviously acknowledging that their $4.4 billion Forbes valuation does not in fact constitute as a “small business.”
The LA Lakers were not the only company to return funds since the onset of the program. Common publicly-traded companies including Shake Shack, Kura Sushi, and Ruth’s Hospitality, which have valuations of $1.77 billion, $76.91 million, and $547.56 million, respectively, also were on the receiving end of scrutiny and had to refund their share of PPP loans.
Also in the CNBC interview, Mnuchin was questioned on whether or not he thinks the federal government is going to directly start buying stocks. He vaguely said it not most likely not going to happen, but stopped short of issuing a full-out explanation of what the government is or is not going to do in the near future.
Information for this briefing was found via CNBC, CNN, Forbes, Yahoo Finance, and Politico. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
