Are qualified small businesses risking layoffs and closure rather than accepting Paycheck Protection Program loans because of fear of a government inquiry? Allyson Baker, chair of Venable’s Financial Services Group, was quoted in Politico regarding the dozens of companies facing pressure to return government-backed small business loans, including not only major brands but also smaller employers that don't want to face scrutiny.
According to the article, the loans, which Congress created to help avert massive layoffs during the COVID-19 pandemic, have proved hugely popular because they can be forgiven if borrowers maintain their payrolls, among other things. The Small Business Administration and the Treasury Department, which are running the program, last month began urging large, publicly traded companies to return any loans after a backlash over revelations that Wall Street-backed corporations were benefiting.
Whether to relinquish the aid has been a wrenching decision for some employers, including those that are not household names and don't have stock traded on public exchanges. The tradeoff comes down to whether to accept funds that could be used to retain employees or face questions from the public and government audits.
“I don't think the decision to take this money is only about being shamed into not taking it,“ said Baker. “There's another side to it, which is, 'If I don't take it, I might be laying people off, I might be hurting my business, I might be hurting the people I employ.' It is something that a lot of people in business are struggling with right now.“
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