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Mnuchin says relief loans over US$2m will be audited

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Treasury Secretary Steven Mnuchin said all loans of more than US$2 million in a government relief programme for small businesses will be audited to ensure they were justified after large public companies and big chains sparked outrage by taking funds.

[WASHINGTON] Treasury Secretary Steven Mnuchin said all loans of more than US$2 million in a government relief programme for small businesses will be audited to ensure they were justified after large public companies and big chains sparked outrage by taking funds.

Mr Mnuchin said the loans of as much as $10 million meant to keep workers on payrolls under the Paycheck Protection Programme were intended for small firms, not public companies and big chains that have access to other capital. The US Small Business Administration will check that borrowers who took large loans properly certified they were needed because of the coronavirus outbreak, he said.

"I want to be very clear it's the borrowers who have criminal liability if they made this certification and it's not true," Mr Mnuchin said Tuesday on CNBC. "We will make sure that what was the intent for taxpayers is fulfilled here."

Mr Mnuchin said it was "outrageous" that the Los Angeles Lakers took a US$4.6 million relief loan, and that it was inappropriate for other large public companies and big chains to get funding as well.

A backlash against those companies getting relief aid has prompted entities including the Lakers to start returning the money. More than US$2 billion from the first round of funding for the programme was declined or returned and will now be made available, SBA Administrator Jovita Carranza said in a tweet on Monday.

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The SBA and Treasury issued guidance last week reaffirming that companies must certify they were affected by the pandemic and telling large firms with access to other capital they shouldn't apply - and that firms can return loans by May 7 without penalty. Hedge funds and private-equity firms were also told they were ineligible.

Senate Minority Leader Chuck Schumer said Tuesday that the Treasury Department and the SBA failed to give guidelines to the banks providing loans under the PPP that would have pushed more of the financing toward smaller firms.

While Democrats helped get money in new Paycheck Protection Programme funds that would be "walled off" for smaller businesses in legislation Congress passed last week, he said the implementation of the small business rescue programme has been an "abject failure" and more work is needed.

Speaking on MSNBC, Mr Schumer said he will send a letter Tuesday to Senate Majority Leader Mitch McConnell, urging him to convene Senate hearings as soon as next week into the administration's broader response to the pandemic. Such hearings would allow "tough question after tough question" about the programme's implementation, the lack of adequate testing and other matters, Mr Schumer said.

The relaunch of the Paycheck Protection Programme with an additional US$320 billion approved by Congress last week got off to a rocky start Monday, with lenders reporting being shut out of the overwhelmed SBA system amid a flood of loan applications and concerns about when struggling companies will get the funding they need.

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