In an interview this morning on CNBC, Treasury Secretary Steven Mnuchin indicated that the government will perform an audit on any company taking out more than $2 million from the small business loan [paycheck protection] program. “I’m going to be putting out an announcement later this morning that for any loan over $2 million, the Small Business Administration (“SBA”) will be doing a full review of that loan before there is loan forgiveness,” Mnuchin said. The Paycheck Protection Program (“PPP”) is a loan program for small businesses that provides funds payroll costs and other expenses for an 8-week period. The loan may be forgiven, if the business maintains certain employment headcount and payroll thresholds over this period.
“We’re going to do a full audit of every loan over $2 million. This was a program designed for small businesses. It was not a program that was designed for public companies that had liquidity,” he added.
Hirsch L. (2020, April 28). Small business loans above $2 million will get full audit to make sure they’re valid, Mnuchin says. CNBC. https://www.cnbc.com/2020/04/28/small-business-loans-above-2-million-will-get-full-audit-to-make-sure-theyre-valid-mnuchin-says.html
Borrowers who have applied for, or received large PPP loans should carefully review the recent guidance issued by SBA for borrowers (large companies) with access to other sources of liquidity or to capital markets and whether they are eligible for PPP loan assistance. The Federal government appears to be making a concerted effort to limit these loans to actual small businesses, who may have limited financing options. For more information on this, read our post: SBA FAQ Address “Good Faith Certification” by PPP Loan Applicants” on our website. We will post details about the Treasury Secretary’s above announcement about auditing these loans, when his statement is available.
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