Financial executives urging White House to investigate PPP loan abuses: Report
FOX Business’ Charlie Gasparino says financial executives are telling the White House to investigate Paycheck Protection Program fraud after firms reportedly pocketed the money marked for small businesses. He also breaks down the new plan for Major League Baseball’s reopening which will require salary cuts for players.
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The deadline for Paycheck Protection Program loan recipients to return their money is Thursday, which is causing a sense of anxiety among some business owners who want to ensure they abide by the program’s evolving criteria.
Federal attorney Nick Oberheiden, who is working with a number of PPP loan recipients, says companies are overwhelmed and owners are having “this type of panic attack” trying to determine whether they still fit the criteria for a PPP loan they received.
“Their concern is when they submitted their application they felt confident they were, in good faith, qualifying,” Oberheiden said. “Then things changed and they are no longer sure if they are covered under the terms and conditions.”
He noted that he is receiving inquiries from business owners who have the “right heart” but are now getting nervous about the pending deadline.
Those worries have likely been heightened after the first PPP loan fraud charges were filed against two New England men earlier this month – and after Treasury Secretary Steven Mnuchin told FOX Business last week that anyone who took the money who shouldn’t have may be held criminally liable.
SBA EXTENDS CORONAVIRUS PPP LOAN RETURN WINDOW: WHAT TO KNOW
In updated guidance issued last week, the Small Business Administration extended its safe harbor period until May 14 from May 7. The safe harbor period allows businesses that received money to ensure they meet the qualifications.
However, Oberheiden told FOX Business even the extended deadline is not enough for many business owners.
“This deadline is unrealistic for a lot of companies because these are very complex, steadily evolving and changing loans that require a good accounting and corporate compliance understanding,” Oberheiden said. “Those with the right intentions, which is not … whom the government needs to go after … are forced to make very difficult decisions in a very short amount of time.”
Oberheiden added that businesses are juggling many pressing issues – from potential reopenings to recruiting workers – and reviewing the loan terms they signed a few weeks ago may simply not be a top priority.
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Since PPP was rolled out so quickly in response to the coronavirus pandemic, there has been some confusion and numerous changes made to different policies, which may have changed the eligibility of some applicants.
In guidance issued in late April, for example, the agency said borrowers needed to assess their need for the loan – certifying in “good faith” that the cash is a necessity to support ongoing operations. The agency said people need to take into account both their current business activity and their ability to access other sources of liquidity to support operations.
“For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification,” the guidance read.
Last week, the SBA suggested it will put out more guidance – which could render additional businesses ineligible for the loan.
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Any company that returns the cash in full by Thursday, however, will have been determined to have made the required certification in good faith.
Oberheiden also said that business owners concerned about their eligibility should “at a minimum” have documentation within the company and within management showing they had discussed potential problems with an underlying desire to do the right thing.
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Some larger companies have already committed to returning the funds after receiving criticism for having applied for the loans in the first place – including Shake Shack, Ruth’s Chris and AutoZone.
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