FILE PHOTO: A sign marks the U.S Treasury Department in Washington, U.S., August 6, 2018. REUTERS/Brian Snyder
WASHINGTON (Reuters) – A highly valued public company will have a hard time getting a coronavirus relief loan, the U.S. Treasury said on Thursday, just as Congress was poised to approve a new round of funding for the loans known as the Paycheck Protection Program.
“It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith,” the Treasury said in an updated list of Frequently Asked Questions on the program.
Public outcry has erupted over major chain restaurants being able to take out the forgivable loans in the first round of lending this month.
Treasury Secretary Steven Mnuchin warned on Wednesday that companies that received the rescue money intended for small businesses could be investigated. He told Fox Business Network it was “questionable” whether larger firms had qualified for loans based on a self-certification step in the application process.
The FAQ made it clear that the Treasury is looking hard at the step in which a small business “must certify in good faith that their PPP loan request is necessary.”
“Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that ‘current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant,’” it said.
The U.S. Senate has approved another $310 billion in funding for the loans, with the House of Representatives set to pass it later on Thursday. The debt, administered by the Small Business Administration, is intended to help employers keep workers on their payrolls.
The initial $349 billion in funding, depleted in less than two weeks, went to publicly held companies such as sandwich chain Potbelly Corp (PBPB.O) and steakhouse operator Ruth Hospitality Group (RUTH.O), prompting complaints that smaller, independent restaurants and “mom and pop” businesses were squeezed out.
Reporting by Lisa Lambert; Additional reporting by Tim Ahmann and David Lawder; Editing by Dan Grebler