A House committee demanded Friday that large public companies that accepted Paycheck Protection Program (PPP) loans meant for small businesses return them immediately.
The House Select Subcommittee on the Coronavirus Crisis, chaired by Rep. James E. Clyburn (D-S.C.), sent letters to five companies, asking them to “immediately return taxpayer funds that Congress intended for small businesses struggling to survive during the coronavirus crisis.”
The committee singled out public companies with a market capitalization of more than $25 million; more than 600 employees; and had sought loans of $10 million or more.
According to FactSquared, a media and research company, nearly 400 public companies applied for and received PPP loans, worth $1.2 billion.
Of 372 total loans issued to public companies, only 47 loans worth $350 million have been returned as of Friday afternoon, FactSquared found. FactSquared said it culled the information from financial statements made by the companies regarding PPP loans.
The committee wrote letters to five companies—all of which accepted loans worth $10 million—requesting that the money be returned. According to the committee, those companies were:
- EVO Transportation & Energy Services, an Arizona-based freight and natural gas company.
- Gulf Island Fabrication, a Houston-based metal fabrication company.
- MiMedx Group, a Georgia-based pharmaceutical company. (MiMedx has since returned its loan)
- Quantum Corporation, a California-based electronic components manufacturer.
- Universal Stainless & Alloy Products, a Pennsylvania-based specialty steel manufacturer.
The letters were signed by seven House Democrats.
On the issue of PPP loans to public companies, however, there has been bipartisan consensus. In April, U.S. Treasury Sec. Steven Mnuchin said that all PPP loans over $2 million made to public companies will be audited. Some companies that applied for the loans may be criminally charged, he said. House Minority Leader Rep. Kevin McCarthy (R-Calif.), pledged on Fox News to “go after those big companies that cheat the system.”
One law firm wondered whether the federal government would also come after banks and financial institutions that facilitated the loans.
“These developments are a reminder that all entities seeking and receiving stimulus funds must be prepared for public and agency scrutiny and potential audits into the certification, receipt, and use of these funds,” wrote the firm Alston & Bird, in an April 30 blog post. “This includes banks that process PPP loan applications. At no time has it been more important to comply with best practices to mitigate the risks associated with participating in this novel program.”
Editor’s note: This story was updated May 12 to reflect MiMedx returning its PPP loan.