Treasury Secretary Steven Mnuchin is insisting that he will not consider changes in the way small businesses use Paycheck Protection Plan (PPP) funding.
During an interview with Fox News Business, Mnuchin was asked if he would be willing to “look at this again and loosen those requirements” as it could lead to an “expansion” of the program.
The host also explained how restaurants could still end up going out of business. Although they would be compensating employees, prolonged closures due to the coronavirus could still cause some businesses to shutter its doors, as she noted.
However, Mnuchin seems unwilling to budge. The treasury secretary doubled down on the requirement that mandates businesses to use the vast majority of the funds to prevent layoffs. According to Mnuchin, the program, designed by Congress, currently has the right focus.
“This was not designed as a loan. It was really designed as a grant.”
“This is the way the program was designed by Congress. We think it has the right intent to get the money to employees. So I don’t have the flexibility to change that,” he said.
The Treasury Department and the Small Business Administration currently has very specific requirements for businesses. Employers are required to use 75% of loan proceeds to pay employees and they must do so within eight weeks.
“The purpose of this was to get workers back to work. Every dollar we spend here is a dollar we save on unemployment insurance,” Mnuchin said. The program is pretty simple: you get two months of payment for your workers and an extra 25% for your overhead.”
However, small businesses in the restaurant industry are arguing that the loan requirements are problematic. Many have higher rent costs for buildings.
The time factor is another issue restaurant owners are frustrated about. With the current loan requirements, restauranteers are forced to pay employees within the eight-week window, but many of their establishments are currently closed.
Despite the growing number of complaints from frustrated restaurant owners in the small business sector, Mnuchin believes it is important to focus on the “bigger picture” — the estimated 60 million people he believes the program can assist.
“Some of those may be restaurants that can’t open,” he said. “A lot of those are restaurants that are ready to open and also restaurants that will do a lot of takeout business.”
The latest news follows a string of reports about the problems business owners have faced with the PPP, as previously reported on IJR. When the first stimulus bill was passed, $350 billion in funds were depleted in less than a week.
The latest stimulus bill passed included $320 billion in new funding for small business loans. As of Monday, the SBA has approved a total of $175.7 billion for PPP applicants between April 27 and May 1.
