Questions are already arising about the government’s so-called “Paycheck Protection Program” and it’s not pretty. When the government orders your “nonessential” business to close, it’s only reasonable that it should compensate you. But what about companies that are deemed to be “essential” and are allowed to remain open and prosper? Should they be compensated as well?
The whole purpose of the PPP (Paycheck Protection Program) is clear; to keep small businesses from going under, not to pay successful companies to further profit. And therein lies the problem. Companies that least needed the money got it, while many smaller businesses got no funding and are left to fail.
But “optics matter” in the current crisis, which is why Harvard, Shake Shack, AutoNation and others have already returned the money. The naming and shaming has just begun!
The deeply flawed SBA lending program requires borrowers to certify, under penalty of perjury, that the PPP loan is “necessary to support ongoing operations” and that the company did not have access to other sources of capital or liquidity. Clearly, for many companies that got funded, this was not true.