The U.S. Treasury Department has issued guidance to prevent large companies from accessing Paycheck Protection Program loans intended to assist small businesses suffering as a result of the significant economic blow dealt by the COVID-19 pandemic.
The Treasury says it's unlikely a public company with substantial market value and access to capital markets would be able to make the required certification in good faith that their PPP loan request is necessary.
Also, any borrower that applied for a PPP loan prior to the release of this new guidance and then repays that amount in full by May 7 will be deemed by SBA to have made the required certification in good faith.
After the PPP ran out of the initial $349 billion dedicated to it in the $2.3 trillion COVID-19 stimulus bill, many small businesses were left high and dry having failed to make it in under the wire.
It wasn't long before reports emerged that some very large companies had qualified for the PPP loans and received money, even though the program was primarily intended to benefit small businesses — defined as those 500 employees or less — hurt by the pandemic.
Shake Shack, for example, which has189 outlets and nearly 8,000 employees nationwide, received $10 million from the PPP. After bearing the brunt of considerable criticism, the company agreed to return the money.
Within that pool, $60 billion will specifically go to small lenders - a priority Democrats pushed for after they blocked a $250 billion funding bill earlier this month.
Congressional leaders and the White House have struck a deal on a new $480 billion stimulus package, which includes another $310 billion to replenish the PPP. The Senate has already voted to approve the agreement; the House is scheduled to vote today.