Treasury Secretary Steven Mnuchin dismissed criticism that the federal government’s small-business rescue plan contains a flaw that will make it unusable for companies shut down by the pandemic, saying that the program simply gives money away.
“The whole purpose of this program is we are giving small businesses money for free. We’re not forcing anything,” he said Tuesday on Fox Business. “We’re basically saying, ‘Here’s money from the government, and as long as you use it to keep workers employed, it’s going to be forgiven.'”
Mnuchin’s comment was in response to a question from the show’s host, Maria Bartiromo, who suggested that the way the loans are structured might not actually help businesses survive the national shutdown.
She pointed out that, during the shutdown, companies are receiving little to no revenue to keep their businesses afloat but that the $350 billion small business forgivable loan program requires that recipients must use 75% of the federal funding for payroll, meaning only 25% of the money can go to nonpayroll items, such as rent. But if rent is not paid, for example, businesses could permanently close, which would put employees out of work. In other words, companies need more support than just for payroll.
“They’re not taking in any revenue, and at some point, something’s got to give,” Bartiromo said, adding that if a company “is doing a fraction of its business because of social distancing, they will simply not be able to take advantage of the loan forgiveness benefit because they’re not going to make it.”
Mnuchin said that if more money was required to keep businesses open, the administration will return to Congress and ask for more money.
“In eight weeks from now, if we need more money, we’ll go back to Congress,” he said. The program, called the Paycheck Protection Program, is designed to cover eight weeks of payroll.
Lawmakers on Capitol Hill are in discussions on a fourth bill that could cost as much as $1 trillion.
