Many publicly traded companies have received more than $500 million in coronavirus aid meant for small businesses.  In some cases, the public backlash has caused some of these companies to return the loans they received. 

According to the Market Watch, certain operators of large restaurant and hotel chains were specifically authorized loans through the Paycheck Protection Program which was part of the $2.2 trillion aid package known as the CARES Act which was signed by President Trump last month.

“The intent of this money was not for big public companies that have access to capital,” Treasury Secretary Steven Mnuchin said on Tuesday evening at the White House’s daily coronavirus briefing.

“We’re going to put up very clear guidance so that people understand what the certification is, what it means if you’re a big company,” Mnuchin also said. “To the extent these companies didn’t understand this and they repay loans, that will be OK, and if not there will be potentially other consequences.”

According to the article, some of the companies involved include hotel REIT Ashford Hospitality Trust Inc. which disclosed receiving $30 million in PPP loans, Ruth’s Chris Steak House parent Ruth’s Hospitality Group Inc. which has reported getting $20 million in PPP loans and burger chain Shake Shack Inc. which on Monday said it was returning its $10 million PPP loan.

The same article stated that the chairman of Ashford Hospitality Trust, Monty Bennett, said “75% or more of the proceeds will be used to bring our employees back to work with the balance to be used to pay utilities, rent, and debt service to lenders.”

Ruth’s Hospitality Group said that they asked for the aid to make sure it’s “well-positioned to emerge from this situation a strong and viable entity,” and the company has said it will be following all Small Business Administration guidelines for the funds.

With the funds running dry last week, an additional $320 billion was added to the Paycheck Protection Program.

Mnuchin said his department would be issuing new guidelines that would tighten the rules for which types of companies could get forgivable loans, potentially restricting publicly trade companies from accessing the relief funds according to a New York Times article published on April 22. 

“If they pay the money back quickly, there will be no liability to Treasury and the S.B.A.,” Mnuchin said. “If they don’t, they could be subject to investigation.”

The initial model of the PPP resembles the Small Business Administration loan program for companies with up to 500 employees, called 7(a) loans.  Restaurant and hotel groups qualified if their respective locations had fewer than 500 workers– even if their total payrolls exceed that number,  a move that had been pushed by lobbyists for hotel and restaurant associations, according to the NYT article.

The chairman of the National Economic Council, Larry Kudlow, said on CNBC on Wednesday when asked about loans going to larger businesses that the program had done “pretty darn well”.

“I know there have been controversial cases,” Kudlow said.

“Programs like this, gigantic programs like this put together quickly will always have glitches. But really, in the main, I think the process worked very, very well.”