White House Extends Safe Harbor for Returning PPP Funds
May 6, 2020
Companies that may have taken more than their fair share of Paycheck Protection Program funds have an additional week to return the loans without facing a penalty. Newly released Small Business Administration guidance on Tuesday shifted the date from May 7 to May 14.
The administration extended the deadline to give companies that had improperly taken loans from the government’s coronavirus small-business relief program, known as PPP, a chance to repay them.
The PPP program was created to help small firms that were facing financial hardship due to the COVID-19 pandemic and provide necessary monetary support for them as incentive to keep workers on their payrolls. However, the program has faced mounting criticism as reports grew that large companies were tapping into the funds.
The first round of the $349 billion in PPP funding ran out on April 16, just 13 days after it started.
Treasury Secretary Steven Mnuchin has warned that the SBA will conduct an audit of all PPP loans of more than $2 million, and companies could face criminal liability if they are found to have wrongfully taken funds from the program.
“This was a program designed for small businesses,” Mnuchin recently told CNBC. “It was not a program that was designed for public companies that had liquidity.” Mnuchin has said the program was intended to benefit businesses with 500 or fewer employees that had been facing economic hardship due to COVID-19.
But several provisions in the program allowed for larger companies to also apply for the loans. Public companies received 339 loans—up to $1.16 billion—as of Tuesday, according to data from FactSquared, as reported by Bloomberg. So far, 42 loans totaling $337.1 million have been returned.
The Paycheck Protection Program was authorized under the CARES Act in response to the economic hardship businesses were facing from the pandemic. After running out of the initial round of money on April 16, the administration replenished the program with another $310 billion.
About 14% of real estate companies in the U.S. received funding in the first round of the PPP during the April 3 to April 13 period. This includes sales, leasing, and maintenance firms, HousingWire reports. The National Association of REALTORS® is awaiting guidance from the SBA on how to apply for loan forgiveness.
“Trump Administration Extends Deadline to Return PPP Loans,” Bloomberg (May 6, 2020) and “Small Business Loans Above $2 Million Will Get a Full Audit to Make Sure They’re Valid, Mnuchin Says,” CNBC (April 28, 2020)
Updated: August 13, 2020