The Small Business Administration will conduct a "full review" of loans for more than $2 million through the Paycheck Protection Program before there is any loan forgiveness, Treasury Secretary Steven Mnuchin said Tuesday.
The announcement comes as a warning to big companies such as AutoNation Inc. and others that had tapped into the administration's $349 billion forgivable loan program designed to support small businesses. The program was recently replenished with an additional $321 billion after President Donald Trump signed a $484 billion spending package.
The Small Business Administration began processing additional loans through the Paycheck Protection Program on Monday. The program provides small businesses with money to pay employee payroll and benefit costs for eight weeks, plus certain other expenses such as rent. The loans can be fully forgiven if companies qualify.
"I think it is unfortunate that there's a small number of companies that have created a lot of publicity that took loans," Mnuchin told CNBC. "I think it was inappropriate for most of these companies to take the loans. It was clear there was certification. We don't think that they ever should have been allowed to."
New guidance from the Small Business Administration published last week said a large company would have to certify it has an economic need for the funding to support its ongoing operations.
"It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith," according to the guidance.
Borrowers that applied for loans under the program before the guidance was updated and that repay loans in full by May 7 "will be deemed by SBA to have made the required certification in good faith," the agency said.
"I'm encouraged by the number of people that have paid them back," Mnuchin said.
AutoNation and Penske Automotive Group Inc. returned loans they received through the program.
Mnuchin said the Treasury Department will issue further guidance on the loan review process today.