Firms return virus loans as Treasury threatens penalties

WASHINGTON » More than 40 public companies are pledging to return money to the government’s small business coronavirus fund now that Treasury Secretary Steven Mnuchin is threatening criminal prosecutions for violating the program rules.

The administration has given companies until May 14 to give back money without penalty. It’s a key test for President Donald Trump’s administration as it tries to ensure the $600 billion-plus emergency lending program helps small employers preserve jobs in an economy shedding them at a staggering rate.

The challenge is considerable. The Small Business Administration is pushing out unprecedented federal assistance at a rapid clip, but the pace of the program has raised questions about how thoroughly applications are vetted.

“You’ve got to do it both efficiently and responsibly, and it’s hard,” said James Thurber, a professor of government at American University who founded its Center for Congressional and Presidential Studies.

Loans given to big publicly traded restaurant chains and the NBA’s Los Angeles Lakers stoked an outcry. The large loans left less money available for small businesses that applied.

Questions about the loans have led Mnuchin, a chief architect of the rescue plan, to take on the role of enforcer. He spoken of criminal prosecution and warned companies they must reimburse the Treasury if they falsely certified that they needed federal aid to operate and could not get it elsewhere.

The SBA also says it will audit every loan exceeding $2 million and if problems are found, it will withhold the program’s offer to forgive the loan.

“So anybody that took the money that shouldn’t have taken the money, one, it won’t be forgiven, and two, they may be subject to criminal liability, which is a big deal,” Mnuchin said in an interview on Fox Business Network.