WASHINGTON (Reuters) – The U.S. Treasury Department will audit every loan for more than $2 million given under the Paycheck Protection Program for businesses hurt by the coronavirus fallout, Treasury Secretary Steven Mnuchin said on Tuesday.
“This was a program designed for small businesses. It was not a program that was designed for public companies if they had liquidity,” he told CNBC in an interview, adding that companies that made false certifications under the program could face criminal liability.
Mnuchin’s comments come as more public companies and better-financed entities have decided to return funds or forego their loan allocations after the Treasury put out new guidance last week excluding well-financed publicly trade companies from the forgivable loans meant to fund payrolls and other expenses during virus-related closures.
On Monday, the Los Angeles Lakers basketball team returned a $4.6 million loan it received through the program. Mnuchin told Fox Business Network he was “outraged” by the Lakers’ request even though he was a fan of the top NBA team.
Mnuchin said the audits of larger loans will come before they can be forgiven by the Treasury. He warned that firms that falsely stated in their application that the loans were necessary to continue operations will face stiff penalties.
“Anybody that took the money that they shouldn’t have taken — one, it won’t be forgiven, and two, they may be subject to criminal liability, which is a big deal,” Mnuchin told Fox Business.
After running out of funds in less than two weeks, the Paycheck Protection Program was relaunched on Monday with an additional $310 million appropriated by Congress, but suffered technical glitches. Mnuchin said that these had largely been fixed on Tuesday.
With some states starting to lift lock-down orders and allow businesses to reopen, Mnuchin said the U.S. economy would begin to rebound during the summer.
“As states start opening up, I think you’re going to see a lot of demand come back,” Mnuchin told Fox Business. “Now again, the states are going to open up slowly, so you’re going to see June and July pick up, but I think by August and September, you’re going to see a big bounce back from what has been a very rocky period.”
Reporting by David Lawder and Susan Heavey; Editing by Chizu Nomiyama and Bernadette Baum