U.S. Lawmakers Blast 5 Large Corporations for Taking $50 Million Meant for Small Businesses. Only One Is Returning the Money.
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The House subcommittee on the coronavirus crisis sent letters to MiMedx, Quantum, EVO Transportation & Energy Services, Gulf Island Fabrication, Universal Stainless and Alloy Products on Friday demanding they return loans received from the treasury. MiMedx said late Friday it was repaying its $10 million loan.
"Since your company is a public entity with a substantial investor base and access to capital markets, we ask that you return these funds immediately," the letters, the committee's first official action, said.
"Returning these funds would allow truly small businesses — which do not have access to alternative sources of capital — to obtain the emergency loans they need to avoid layoffs, stay in business, and weather the economic disruption caused by the coronavirus crisis."
The $669 billion PPP launched in early April, and applicants quickly reported errors with online systems. Large corporations like Shake Shack, Ruth's Chris and the Los Angeles Lakes (all of which returned their loans) were lightning rods for public backlash that eventually led to a more specific self-certification as part of the application and reviews by Treasury officials on loans larger than $2 million.
"It is unfortunate that a small number of companies that have created a lot of publicity that took loans," Treasury Secretary Steven Mnuchin told CNBC at the time. "I think it was inappropriate for most of these companies to take loans, and we don't think that they ever should have been allowed to."
Quantum said in an emailed statement Sunday that the $10 million loan it received helped save jobs it would otherwise have to cut.
"Quantum believes it owes a duty to its American employees who would lose their jobs if Quantum returned its PPP loan to demonstrate why Quantum not only falls within the technical eligibility requirements of the PPP loan program, but also falls squarely within the spirit of what was intended by the Cares Act," a representative said.
If the companies addressed by the committee opt to not return the money by May 11, lawmakers want to see "all documents and communications" between them and the Small Business Administration in order to prove their need for the funds and appropriate usage.
"Congress did not intend for these funds to be used by large corporations that have a substantial investor base and access to capital markets," the lawmakers' said.