U.S. Lawmakers Blast 5 Large Corporations for Taking $50 Million Meant for Small Businesses. Only One Is Returning the Money. House lawmakers on Friday demanded five large, publicly traded companies return the $10 million loans they received that were meant for small businesses.

By Graham Rapler

This story originally appeared on Business Insider

Reuters via BI
xU.S. Representative Jim Clyburn is chair of the House Select Subcommittee on the Coronavirus Crisis.

U.S. representatives blasted five publicly traded companies for taking Paycheck Protection Program loans means for small businesses, leading at least one to return the money.

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."

Still, only 48 public companies of the 387 that received PPP loans have returned the money, according to an analysis of regulatory filings by FactSquared.

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.

Editor's Pick

Related Topics

Marketing

Don't Just Babble on LinkedIn — You Need to Carve Out Your Own Niche. Here's Why.

To ultimately unlock the full potential of your LinkedIn experience, you need to establish yourself as a thought leader in a specific niche. This is why (and how).

Growing a Business

How an Executive Coach Can Help You Set Better Goals — And Transform Your Business

Ways to enhance your competitive advantage — and psychological wellbeing — with the assistance of a seasoned, results-focused professional.

Side Hustle

He Launched His Creative Side Hustle Out of a Garage. Now It's Worth $225 Million.

Tom Humble, CXO and founder of E.C.D. Automotive Design, followed his passion for custom auto design into big business.

Business News

This Company Promised to Transform Drive-Thrus With AI — But the Secret Powering Its Tech? Humans.

Presto Automation Inc., one of several major players in AI-ordering tech, has made headlines for using off-site employees in places like the Phillippines.

Side Hustle

Anyone Can Start a Passive Income Side Hustle For Easy Money — But Only If You Know These 5 Essential Tips First.

The rise of digital automation technology has made starting a passive income side hustle easier and more accessible than ever before.

Growing a Business

7 Strategies to Secure Business from Fellow Entrepreneurs

When implemented, these seven strategies will be valuable and helpful in growing your brand and ultimately increasing your revenue.