Treasury Secretary Threatens ‘Severe Consequences’ to Big Businesses That Don’t Return PPP Loans

Treasury Secretary Threatens ‘Severe Consequences’ to Big Businesses That Don’t Return PPP Loans

Image Credit: The White House


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A M Reid
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The Senate Tuesday passed a new coronavirus relief bill totaling around $480 billion. The deal includes an additional $320 billion for the Payment Protection Program (PPP), which ran out of its initial $349 billion fund last week. 

However, it was recently discovered that big institutions like Shake Shack Inc. and Potbelly Corp. have received loans from the program, even though the loans are meant for small businesses. Both Shake Shack Inc. and Potbelly Corp. received a sum of $10 million.

Sen. Martha McSally (R-Ariz), in an appearance on Fox and Friends with hosts Steve Doocy, Ainsley Earhardt, and Brian Kilmeade, heavily criticized the big institutions that were taking money from the PPP fund, as well as the big banks that enabled them to do so.

“When we passed this legislation, we said what’s the fastest way to get the money out to these small businesses? And really the words of the day were speed, also grace, good faith, and selflessness, right? We are all in this together as Americans. We decided to use the financial institutions to more quickly get the money out,” McSally said. “I tweeted out yesterday, dear big banks, the PPP money is not yours, it’s the taxpayers’ money, and it needs to go to mom and pop shops. They need to make sure they’re just passing through, they’re just processing it. This isn’t about their relationships with others who have plenty of access to capital.”

“You big companies out there, give the money back, support your workers,” she continued. “You big banks out there, you get that money out to those mom and pop shops, those one-person businesses, that’s why we chose to do it this way, do the right thing.”

Notably, Shake Shack CEO Randy Garutti and Danny Meyer, founder of Shake Shack and Union Square Hospitality Group, have announced they will be returning the $10 million loan they took from the program. They explained in an open letter that they are fortunate enough to no longer need the loan because they gained the “additional capital…needed to ensure…long term stability through an equity transaction in the public markets.”

They added that after seeing how underfunded the program was, they felt it was only right to return the money:

“Our people would benefit from a $10 million PPP loan but we’re fortunate to now have access to capital that others do not. Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours.”

Treasury Secretary Steven Mnuchin has since said that big businesses who have taken PPP funds must “pay back the loan right away,” or face “severe consequences.”

“We want to make sure this money is available to small businesses that need it, people who have invested their entire life savings,” Mnuchin remarked.

Big educational institutions have also come under scrutiny for taking funds from coronavirus aid. Harvard in particular has faced backlash, as although it is the wealthiest university in the world and has a $40 billion endowment, it still received nearly $9 million in funds from the Coronavirus Aid, Relief and Economic Security (CARE) Act.

At a Tuesday press briefing, President Donald Trump said that Harvard must “pay back the money” as “they shouldn’t be taking it.”

Soon after Trump’s announcement, Harvard stated that they will not be returning the money, but they emphasized that “100 percent of the funds” will be used to financially assist students, and they “will not be using any of the funds to cover institutional costs.”

McSally, during the Fox and Friends interview, blasted Harvard for this, calling their decision to take the aid money “disgusting.”

“I got a masters from Harvard but they need to give that money back,” McSally further told the show hosts. “It came from another pot of money, but still they have a 40 billion-dollar endowment. They should help struggling students with that.”

Update: Harvard has now changed their decision and will not “seek or accept the funds allocated to it by statute.”

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