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Treasury says public companies should repay their PPP loans
Source: CNN Business
Treasury says public companies should repay their PPP loans
By Alicia Wallace, CNN Business
Updated 0027 GMT (0827 HKT) April 24, 2020
San Francisco (CNN Business) — When the $349 billion Paycheck Protection Program quickly ran dry, the big companies that landed large loans drew the ire of small businesses and their advocates.
Small business owners sued their banks and "cancel culture" swung into action against such well-known brands like Ruth's (RUTH) Chris, Shake Shack (SHAK) and Potbelly (PBPB) that secured $40 million in PPP loans among them. In recent days, companies like Shake Shack, Kura Sushi USA and the privately held Sweetgreen buckled under the public scrutiny and announced plans to return the funds.
Now the government is hoping the others pay up.
Under new Treasury guidance issued Thursday, PPP borrowers must certify "in good faith" that they absolutely need the loans to keep operating. That includes taking into account aspects such as business activity and their ability to access other sources of capital.
"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 Small Business Administration, upon request, the basis for its certification," according to the Treasury guidance released Thursday. " ... Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020, will be deemed by SBA to have made the required certification in good faith."
In other words, the Treasury wants its money back.
-snip-
By Alicia Wallace, CNN Business
Updated 0027 GMT (0827 HKT) April 24, 2020
San Francisco (CNN Business) — When the $349 billion Paycheck Protection Program quickly ran dry, the big companies that landed large loans drew the ire of small businesses and their advocates.
Small business owners sued their banks and "cancel culture" swung into action against such well-known brands like Ruth's (RUTH) Chris, Shake Shack (SHAK) and Potbelly (PBPB) that secured $40 million in PPP loans among them. In recent days, companies like Shake Shack, Kura Sushi USA and the privately held Sweetgreen buckled under the public scrutiny and announced plans to return the funds.
Now the government is hoping the others pay up.
Under new Treasury guidance issued Thursday, PPP borrowers must certify "in good faith" that they absolutely need the loans to keep operating. That includes taking into account aspects such as business activity and their ability to access other sources of capital.
"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 Small Business Administration, upon request, the basis for its certification," according to the Treasury guidance released Thursday. " ... Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020, will be deemed by SBA to have made the required certification in good faith."
In other words, the Treasury wants its money back.
-snip-
Read more: https://edition.cnn.com/2020/04/23/business/treasury-public-companies-ppp-loans-repay/index.html
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