House coronavirus oversight panel asks five companies to return loans meant for small businesses

Business

(CNN) — The House Oversight Committee’s new select coronavirus oversight panel sent letters to five different companies on Friday asking them to return loans they received from the Paycheck Protection Program set up during the pandemic to aid struggling small businesses.

The letters ask each of the companies to “immediately return” the loan given out under the program “so that these funds may be used to support truly small businesses that are struggling to survive during the coronavirus crisis.”

The move, which stands as the first official action taken by the newly created oversight panel, comes amid an outcry over how the funds have been distributed, with some loans going to chain restaurants and publicly traded corporations as opposed to small, local businesses.

While the loans going to publicly traded companies have been just a small fraction of the money going out the door, they have generated outsized media scrutiny. A list of which private companies got the money has not been released by the Small Business Administration.

The companies that received letters are MiMedx Group, EVO Transportation & Energy Services, Universal Stainless & Alloy Products, Quantum Corp. and Gulf Island Fabrication.

The letters state, “Unfortunately, many large companies were able to utilize this program and obtained PPP loans that were intended for small businesses. Some of the companies returned these funds amid widespread public outrage. However, other companies — including yours — still have not returned these funds.”

The panel has set a deadline of Monday for each company to notify it as to whether it will return the funding. If a company opts not to do so, the panel requests that the company produce documents and communications related to the loan.

“If you choose not to return some or all of these funds, we request that you produce by May 15, 2020, all documents and communications (1) between your company and the Small Business Administration and the Department of the Treasury relating to the PPP loan; and (2) between your company and any financial institution relating to the PPP loan, including all applications for a PPP loan,” the letter states.

The newly established panel has become a source of conflict on Capitol Hill, with House Republicans accusing Democrats of using it as a way to launch partisan attacks against the administration, and arguing that it is unnecessary given other oversight mechanisms already in place.

The Paycheck Protection Program, however, has been scrutinized by members of both parties. And Treasury Secretary Steve Mnuchin has said the Treasury Department will audit all Paycheck Protection Program loans of more than $2 million.

House Speaker Nancy Pelosi, a California Democrat, last week named Democratic members to the panel, which will be chaired by Majority Whip Jim Clyburn, a South Carolina Democrat. House GOP leader Kevin McCarthy of California moved this week to appoint Republican members.

The letters are signed only by Democratic members of the panel.

House GOP Whip Steve Scalise, the top Republican on the select subcommittee, condemned the move on Friday afternoon, calling it “outrageous” and saying that he hopes Democrats will “change course.”

“It is outrageous and telling that the first action committee Democrats have taken is blindly sending harassing letters to individual companies that followed the law to keep their workers on the payroll,” Scalise said in a statement.

“Secretary Mnuchin has already stated that the Treasury Department is looking into all companies that have received loans through the overwhelmingly successful PPP fund,” Scalise added. “With a large-scale audit underway, this action by Democrats represents dangerous government intimidation that could cause more widespread layoffs at a time when we should be trying to keep American workers on the payroll.”

The panel said that in its issuance of requests to return Paycheck Protection Program money, it focused on targeting companies that “are public, have market capitalization of more than $25 million; have more than 600 employees; and sought and received ‘small business’ loans of $10 million or more.”

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