PPP Loans Could Trigger Treasury Investigation


Companies that received Paycheck Protection Program (PPP) loans could face investigations if they did not meet the criteria for coronavirus relief, U.S. Treasury Secretary Steven Mnuchin said on Wednesday (April 22).

“I think a lot of these big companies, it is questionable whether they could make that certification,” Mnuchin told FOX Business. “I think they should review it.”

Some of the bigger firms receiving loans qualified during the self-certification step of the PPP process but may not actually need the money to stay afloat during the pandemic, Mnuchin said. The PPP application requires companies to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.”

The government is in the process of approving $310 billion in additional PPP loans after the first funding round of $349 billion was depleted just days after becoming available on April 3.

There was little oversight when the initial forgivable loans were extended and companies worth millions — such as Ruth’s Chris Steakhouse and Potbelly sandwich chain — got PPP money at the expense of many smaller and family-run businesses that got nothing. 

Shake Shack had received $10 million but returned the money, stating that it had other means to acquire funds. Harvard University also said it would return the $8.6 million it received from the Higher Education Emergency Relief Fund, another coronavirus assistance program.

The money can be used for payroll and other expenses, like insurance premiums, mortgages, rent or utilities through June 30. As long as 75 percent of the money goes toward keeping workers employed and maintaining salary levels, the loans, which are guaranteed by the federal government, will be fully forgiven.

Unqualified companies that received the funding should return the loan money, or “they could be subject to investigation,” Mnuchin said.

The is a lot of room for fraud in the $2.2 trillion funding under the CARES Act, Brian Benczkowski, assistant attorney general of the Justice Department’s Criminal Division, told Reuters. 

“There is a potential there will be fraudulent or false statements on the loan applications … [or] non-existent businesses attempting to dummy up paperwork,” Benczkowski said.  

The DOJ’s criminal division will closely watch the upcoming round of PPP loans, using techniques similar to those used to detect other fraud.

The House is anticipated to pass a $484 billion coronavirus economic relief bill on Thursday (April 23), which was approved by the Senate on Tuesday (April 21) following a two-week stalemate.