Sen. Amy Klobuchar and 21 other senators urged on the Trump administration on Monday to take more action to ensure that the small businesses most devastated during the coronavirus pandemic are not shut out of the key government lifeline.
In a letter to Treasury Secretary Steven Mnuchin and Small Business Administrator Jovita Carranza, the lawmakers urged the administration to make public the measures it will put in place to ensure that loans are not “unjustly enriching” companies in less dire financial needs.
Senators’ outreach reveals that some loans from the first round of $350 billion in funding for the Paycheck Insurance System, designed to keep employees on small business payrolls as firms are shut down, went to hedge funds and public companies.
The senators wrote, “Every loan that provides a windfall for an applicant who does not truly need it results in one fewer loan made to a struggling small business owner whose employees could be truly helped by this funding.”
The lawmakers pressured the Trump administration on the day it intended to start accepting applications for small business relief following a pause when funding lapsed. Last week, Congress approved a $310 billion new program money bill, including $60 billion set aside specifically for small lenders.
The group that signed the letter includes five former 2020 Democratic presidential hopefuls: Klobuchar of Minnesota and Sens. Kirsten Gillibrand, New York, Kamala Harris, California, Bernie Sanders, Vermont, and Elizabeth Warren, Massachusetts. Klobuchar, Harris, and Warren’s names have circulated in reports that the likely Democratic nominee, Joe Biden, could select as his running mate in November’s election.
All the senators who signed the letter are Democrats except Sanders and Angus King of Maine, two independents who are caucused with Democrats.
Last week, the SBA issued new guidelines aimed at making it harder for publicly traded companies to secure loans under the Small Business Programme. It also said that hedge funds and private equity firms would be ineligible for relief.
In their letter of Monday, the senators indicated that the rules will always be based on the “good faith” of the applicants. The legislature asked the Trump administration what criteria it would consider other than the applicant being a large public company, hedge fund or private equity firm to determine if companies are unfairly taking advantage of the programme.
They also questioned whether the administration should commit to transparency as to who gets the money, and take immediate action if it finds out that a company is not in dire need of help to get a loan.
Spokespersons for the Treasury Department and the Small Business Administration did not respond immediately to requests for comment on the letter.