Treasury Secretary warns there will be 'severe consequences' for large companies that took bailout loans intended for small businesses

• US lawmakers are close to passing a second wave of funding for the Paycheck Protection Program.
• However, Trump administration officials lambasted large corporations which took advantage of the program meant for small businesses.
• The big businesses technically qualified because of the language in the law which defines small businesses on an employees-per-location basis.
• Going forward there will be "severe consequences" and clearer guidelines, the Treasury secretary said.
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The Trump Administration isn't happy with large corporations like Shake Shack, Ruth's Chris, and Potbelly receiving government stimulus aid meant for small businesses as their smaller competitors struggle to access the funds.

In a White House briefing on Tuesday, Treasury Secretary Steven Mnuchin warned of "severe consequences" for large companies that took advantage of Paycheck Protection Program loans, despite technically qualifying for aid due to a loophole in the law's language.

"We're going to put an FAQ out, explain the certification," he said of the new funds set to replenish the $350 billion program which ran dry in just two weeks after its April 2 launch.

"But there are severe consequences for people who don't attest properly to this certification. And again, we want to make sure this money is available to small businesses that need it, people who have invested their entire life savings. We appreciate what's going on, and they're hiring people back."

Many large restaurant chains like Shake Shack, which later returned its $10 million loan, and hotels — most of which were closed indefinitely due to the pandemic — qualified for the funding because of an exception that allowed any company with less than 500 employees per location to apply for a PPP loan.

"If, to the extent these companies didn't understand this and they repay the loans, that will be okay," Mnuchin said. "And if not, there'll be potentially other consequences."

Asked for specifics on potential consequences, the secretary did not elaborate.

In the same press conference, President Donald Trump also lashed out at Harvard University following reports the school had received $8 million through the program despite having a $41 billion endowment. Administrators told Bloomberg News the school did not apply for the PPP program.

Harvard did, however, receive funding from the $2 trillion CARES Act — the pandemic relief legislation which set up the PPP program — in the form of education grants. According to The Guardian, the university said it plans "to direct 100% of the funds to financial assistance to students, and will not be using any of the funds to cover institutional costs."

"President Trump is right that it would not have been appropriate for our institution to receive funds that were designated for struggling small businesses," the university said in a statement.

A second infusion of $310 billion to the PPP program was passed by the Senate Tuesday evening. The House is expected to approve the replenishment on Thursday.

"We're pleased with the success of this program and how quickly this got up operationally," Mnuchin said. "We've — we've put out more money in these SBA loans than in the last 10 years of SBA. So I want to thank all the banks that have worked really hard."

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