Today, Jeff Sessions released a proposal for big publicly-traded companies to immediately return every penny they took from taxpayers through the Paycheck Protection Program under the 2020 CARES Act.
The program is intended to help struggling small- and medium-sized businesses who do not have access to cash reserves or adequate lines of credit to see them through the economic shutdown caused by the Wuhan Virus.
Instead, more than 220 large, publicly-traded companies applied for hundreds of millions from the taxpayers, and the Paycheck Protection Program loan funding was quickly depleted. Congress has since put some additional funding in that program. Meanwhile 70% of actual small businesses have already applied for the loans, and more are clearly in desperate need and will seek help.
“The whole purpose of the CARES Act is to prevent this historic shutdown from ending thousands of small businesses,” Sessions said. “Mom-and-pop stores have been shuttered by ‘stay at home’ orders, and big corporations are taking large sums meant for the little guy. Every one of them should return these loans immediately, and the Small Business Administration should ensure those funds go to struggling small businesses first. The plain fact is that, for many, the prompt receipt of these funds will determine whether they will still be operating in the months to come.”
To ensure that small businesses get the help they need, Sessions proposed that the Small Business Administration must prioritize the loan funds by business size and need, with a focus on businesses with fewer than 100 employees. Smaller companies with immediate need and limited credit options and cash reserves can’t be put at the bottom of the list and hung out to dry. Time is a life-and-death matter for many of those businesses.
The National Federation of Independent Business, which is the largest representative of American small businesses across the country, has found the taxpayer money these big corporations took could have instead covered the salaries of 13,000 small businesses, each with five employees with average salaries of $65,000. Many such businesses have no other options for financial assistance.
The Paycheck Protection Program is supposed to limit loans to no more than $10 million per applicant, but many big businesses were able to exceed those limits by having each of their subsidiaries file individual applications as separate companies. This must end now.
And as mom-and-pop shops were edged out of available loans, certain corporations and universities moved in and received millions in taxpayer funding. For example, Ruth’s Chris Steak House’s parent company received $20 million, and Potbelly Corporation received $10 million. Some big companies, like the Los Angeles Lakers and Shake Shack, have already realized how bad their taking the money looks, and returned the millions of dollars they each took from the Paycheck Protection Program. Other big companies should follow suit.
Treasury Secretary Steven Mnuchin said last week that the “intent of this money was not for big public companies that have access to capital.” It’s time for those large companies to return those funds, and the Small Business Administration needs to get serious about ensuring that those loans go directly to small businesses first, as intended.