Hundreds of millions of dollars in emergency funds that Congress specifically designated for the survival of small businesses during the coronavirus shutdown instead have been diverted to big corporations — an outrageous breach that occurred entirely on President Donald Trump's watch. A president who refuses to take responsibility and constantly blames others for the many missteps in this crisis cannot avoid responsibility for his administration's botched disbursement of small business loans.
Treasury Secretary Steven Mnuchin says the big companies that received small-business funding as part of a $2.2 trillion rescue package approved in late March will be required to repay what they've received. But why did they qualify in the first place while so many others have been turned away? This is exactly the kind of administrative blundering that independent oversight should have been able to prevent. But Trump rejected any such requirement, declaring, "I'll be the oversight."
An Associated Press investigation revealed that big companies — some with thousands of employees, others that aren't even U.S. registered, and still others that had been cited for previous financial abuses — took liberal advantage of the $349 billion Paycheck Protection Program. The program was designed by Congress to help U.S. small businesses survive during the shutdown, keep employees on the payroll, continue paying bills and be prepared to quickly resume operations after the crisis subsides.
At least 75 companies large enough to be publicly traded, some with market values exceeding $100 million, applied for and received multimillion-dollar government loans under the program. A quarter of the companies had been in financial trouble well before the pandemic hit. The government had no business investing precious taxpayer money in them when far more worthy mom-and-pop operations were being turned away as funds ran out.
The Small Business Administration was responsible for administering the forgivable, low-interest loans under this program. The typical loan has been in the range of $206,000, The Associated Press reported, yet 4,400 loans exceeded $5 million each. Some of the beneficiaries aren't even U.S. companies — they're registered in distant countries such as Singapore.
Among eligible beneficiaries were several fast-food chains, which in some cases might be understandable because franchises often are independently owned and operated, making them truly small businesses. Shake Shack, the $1.6 billion burger chain, was so embarrassed when its name showed up on the list, officials announced that the company would return the $10 million loan it received.
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