The Pandemic and ensuing shut down hit many Americans hard, but small businesses were often the first on the chopping block with many closing their doors forever. As part of the CARES Act, passed in March, the federal government authorized billions of dollars for the Small Business Assistance Program, meant to provide loans to keep small businesses afloat and operating despite lack of business as customers sheltered in place. However, the federal government recently released a list of recipients of some of the biggest loans showing that plenty of the funds that were earmarked for small businesses went to nationwide chains instead.
How is it possible that businesses worth billions of dollars were able to claim the loans meant to bail out the mom and pop shop down the block? The wording of the Act itself comes into play here, stating that a business “that employs not more than 500 employees per physical location of the business” could be eligible to receive a loan. For businesses that operate locations all over the country with few employees per store, this wording allowed them to legally claim funds that were intended for much smaller businesses.
The Department of the Treasury has issued recent guidelines suggesting that companies that received the SBA loans will need to certify that they could not have received credit from any other source when they accepted the loan funds, or they may need to return it. For most billion-dollar businesses, this will be a hard hurdle jump and they will likely need to return their funds to the pot.
If you have questions about SBA loans, contact us for a free, 30-minute consultation.
