NEW YORK/BOSTON, May 7 - When American companies recently applied for U.S. government loans meant to help small businesses survive the coronavirus crisis, they had to certify they needed the cash to cover basic needs like salaries and rent.
All told, these relatively flush 41 companies were able to secure $104 million in government aid, at a time when legions of smaller companies with little in their coffers were being turned down. Seventeen of the 41 recipients had market capitalizations of at least $100 million. As part of the loan application, company executives had to certify in good faith that “current economic uncertainty makes this loan necessary to support” their ongoing operations.
Other recipients issued bright outlooks. Medical device maker Repro Med Systems Inc and electronics supplier Micropac Industries Inc said the pandemic had not had a significant impact on their businesses. The company was planning to disclose the loan’s return on Thursday, when it releases first-quarter financial results.
The small business loan program was initially funded with $349 billion. Congress had to top it off with another $310 billion because the money, which was supposed to be handed out on a first-come, first-served basis, ran out while many applicants were still awaiting the grants. Part of the problem, some critics say, is the loose wording of the program’s rules. Virginia Canter, chief ethics counsel at nonprofit watchdog group Citizens for Responsibility and Ethics in Washington, said the administration should have issued clearer guidance about who’s eligible.The Treasury has offered amnesty to public companies that return any money they borrowed by May 14, saying it would deem they made the application in good faith if they did so.
“Federal regulators are going to be looking at discrepancies very closely. If there’s a big disconnect, subpoenas may be on the way,” said Michael Birnbaum, a former U.S. Securities and Exchange Commission enforcement attorney who is now at Morrison & Foerster LLP.Such cases may be hard to prove, however. Alan Wink, managing director at accounting firm EisnerAmper, said it was clear from the Reuters analysis that some healthy companies received PPP funds.
Athersys, for example, said its stem cell therapy was being tested on COVID-19 patients. The company’s shares have more than doubled since mid-March, giving it a market value of more than $500 million. Repro Med said on Monday it was an essential business under New York guidelines and had seen net sales rise 27% in the first quarter.
While I never reverend stimulus for my kids and we must move from a horrible company that rents homes and takes care of none it’s making me sick and I am req to have a large deposit due to financial abuse from DV. I am so sick of greed while we are all becoming homeless
Of course. Families devastated are still waiting for their one-time stimulus check and to get through to the unemployment office.
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