The Washington Post reports that as of May 1, publicly traded companies have received over $1 billion from the federal stimulus package meant for small businesses as distributed through the Paycheck Protection Program. The Program offers forgivable loans to businesses and has been touted as relief aid for small businesses.
Nearly 300 public companies have reported receiving funds through the Program. Forty-three companies had more than 500 workers, the maximum normally allowed by the program. Several of these companies paid executives more than $2 million or more annually.
In wake of the outrage over money that went to public firms, some companies have returned the funds. More than $125 million has been returned.
Other companies have chosen to retain the funds, as the money had been awarded according to the Program’s rules and is being used to pay workers.
Steven Mnuchin, secretary of the Treasury Department, said that the program is a success and has reported that over three-quarters of the loans made have been for less than $150,000. Nevertheless, the administration is releasing new guidance for the next stimulus package meant to discourage publicly traded companies from applying.
Mnuchin also warned that all loans of more than $2 million will be audited. Publicly traded companies with access to other capital have been instructed to return their loan money by May 7, and there may be penalties for noncompliance.
Mnuchin said that “it’s the borrowers who have criminal liability if they made this certification” that they were small businesses.
Aquestive Therapeutics is one business that has announced it will return the money it received through Payment Protection. The company has only 219 employees, but it is publicly traded on the stock market, and CEO Keith J. Kendall received a $2.9 million salary in 2019.
The company said in a statement,
As a small business, we were happy to qualify for a PPP loan, as it was originally written and intended, to continue to employ and provide health coverage to our 219 employees located around the country and provide important medicines to these patients during this period of crisis… However, the new guidance issued on April 23 by the Federal Government appears to change the criteria for small businesses to qualify for the PPP loans.
Chain restaurants and hotels were able to receive funding through the Program because Congress and the administration allowed large owners’ multiple subsidiaries to apply separately. For example, a group of hotel companies chaired by Monty Bennett used more than 100 filings to receive $76 million.