By on April 28, 2020

With enhanced scrutiny and plenty of differing opinions being heaped upon the government loans issued to help soften the economic impact of the coronavirus pandemic, the Small Business Administration (SBA) has signaled plans to conduct comprehensive investigations before offering any loan forgiveness. Under normal circumstances, one would expect that to be the typical course of action for all loans. But the scope of the Paycheck Protection Program (PPP) has complicated things.

Designed to provide a direct incentive for small businesses to keep workers on the payroll, the program earned heaps of criticism after millions of dollars were allocated to groups that didn’t exactly constitute small businesses. While the list is long, standouts include the Los Angles Lakers and Ruth’s Hospitality Group. We’re more interested in the United States’ largest new-vehicle retailers, AutoNation and Penske Automotive — both of which received millions via the SBA’s Paycheck Protection Program. 

Responding to criticism, AutoNation announced it would return the $77 million in loans last Thursday. It also planned to cancel all of its existing loan applications. Penske beat it to the punch by one day, doing the same while making itself look slightly better by beating updated guidance from the SBA requiring all “large businesses” to certify they have a valid need for funding through the coronavirus relief package.

While neither really fit the definition of a small business, many complained that such companies employ sizable numbers and should be given aid when needed. Of course, the counterpoint is that bigger businesses often have robust cash reserves that must be taken into account — which sounds like something the Department of the Treasury would like to see happen.

On Tuesday, Treasury Secretary Steven Mnuchin said the SBA will critically examine all PPP loans valued at more than $2 million. Bemoaning the fact that the second most-valuable NBA franchise in existence (the LA Lakers) managed to snag $4.6 million on CNBC, Mnuchin said he was glad to see them return the money — suggesting they’d otherwise be open to legal ramifications. He said the same about AutoNation.

So what happened? Well, the government started offering free money and everyone wanted some. The original $349 billion forgivable loan program exhausted its funds sooner than anyone expected; President Donald Trump has since signed a $484 billion spending package that dumps another $321 billion into the Paycheck Protection Program. However, that new round of funding isn’t expected to last more than a couple of weeks. Hopefully that sees the U.S. through the worst of the economic strain caused by the pandemic, as most of the automotive industry plans on relaunching production by mid-May.

[Image: Casimiro PT/Shutterstock]

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13 Comments on “Small Business Administration Keeping Closer Tabs on Loan Forgiveness...”


  • avatar
    Rocket

    Sickening that pressure had to be applied for the money to be returned. And you can bet billions in taxpayer money will be lost to other “small” businesses that are anything but.

  • avatar
    phxmotor

    Is anyone rally surprised?
    Seriously?
    Let’s remember each BILLION = $4,000 per person in
    4 billion = $16,000 per person.
    All for what? …s normal seasonal virus.
    …that’s what…
    The Bakersfield doctors are right? Of course… of course they are.

    • 0 avatar
      dal20402

      Your math is heavily challenged. $1 billion is $3 per person in the U.S.

      • 0 avatar
        JimZ

        heh, he was off by three orders of magnitude.

        • 0 avatar
          Hummer

          Jim how did you change your avatar, I haven’t been able to get anything other than a stock image to download in several years.

          Did they actually fix the setup?

        • 0 avatar
          golden2husky

          Well, he was off by far more regarding the reference to this “normal seasonable virus.” According to Business Insider, the death rate for a “normal seasonable virus” is .1% in the US. Corona takes 1.8% in the US, and closer to 4.7% worldwide. Data as of end of March.

          You can’t fix stupid. Facts matter. The numbers above may be lowered over time but no way will you find a .1% death rate for Coronavirus. When is this stupid argument going to end? Even Fox bailed on that argument – probably at the same time the News Corporation started having staff work at home.

          Bakersfiled doctors were soundly debunked.

          • 0 avatar

            You’ve made my day. FB has a winger friend with that video “FB censors” outrage. I follow a TTAC time waster link on PPP loans (my bank would not take any, so of interest) and I get the debunk on the winger friend’s pissed censorship video.

            The internet is now officially a circle.

          • 0 avatar
            jkross22

            goldenhusky,

            We still do not know the death rate for COVID because our lack of testing hasn’t gotten us in the ballpark of making reliable estimates. We don’t know what the denominator is – the number of people who have COVID, but are either asymptomatic or have mild to medium symptoms and recover.

            A company in Irvine, CA recently tested all of their employees and found that 10% of them had COVID at the time of testing or had COVID and recovered.

            Should we extrapolate from that sample of less than 500 people a morbidity rate? Whether you believe the worst case scenario or the best case, you’re probably wrong. We don’t have the testing to make educated estimates, so maybe we should hold off with the finger pointing.

      • 0 avatar
        RHD

        The “normal seasonal virus” bit is as accurate to the same degree.

  • avatar

    Did GM, FIAT and Ford also apply for that loan? The Big 3 is not big anymore. I would call them rather Small 3.

  • avatar

    You’ve made my day. FB has a winger friend with that video “FB censors” outrage. I follow a TTAC time waster link on PPP loans (my bank would not take any, so of interest) and I get the debunk on the winger friend’s unhappy about censorship video.

    The internet is now officially a circle.

    edit:removed a nonprofane/nonsexist/nonracial word the TTAC filter dislikes.

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