It has taken a week to find out why the Payment Protection Program (PPP) ran dry of funds so quickly. The answer is greed, and now the President demands those responsible to return relief funds or face consequences.
The PPP was set up to save small mom-and-pop shops, to keep their employees on payrolls, and prevent massive layoffs during the COVID-19 pandemic amid state-wide lockdowns.
The government, knowing the importance of the PPP relief funds pushed a new bill through Senate. It will add $310-billion more to the PPP relief fund. However, since the funds dried up, the destination of that money has been reviewed and it’s shocking.
President Trump singled out Harvard from a list of big institutes and major businesses that have taken the money. The President said: “They shouldn’t be taking it. Harvard is going to, and I’m not gonna name any other names, but when I saw Harvard — They have one of the largest endowments anywhere maybe in the world, and they’re gonna pay back that money.”
The President and Treasury Secretary Steve Mnuchin are serious about getting money back from those who shouldn’t have taken it. The President even said that any large companies that fail to return relief funds will face “severe consequences.”
The Harvard Example
According to reports, Harvard took just under $9-million from the Paycheck Protection Program (PPP) relief fund and have an endowment value of $40.9 billion. That’s the largest endowment of any university in the world. Yale also took money from the relief fund and they have an endowment fund of over $30 billion.
It’s safe to say, Harvard and Yale did not need relief funds.
Republican Senator Ted Cruz said on Twitter: “Taxpayer relief funds should go to those in real need. Harvard University has a $41bn endowment—the largest in the world. Put another way, Harvard’s endowment is $13mm per student or $171mm per faculty member.”
Knowing it faced a backlash, Harvard had already announced that it planned to allocate 100% of the PPP relief funds it received to student financial assistance.
Jason Newton, associate director of Harvard’s media relations, wrote in a statement: “Harvard is actually allocating 100% of the funds to financial assistance for students to meet their urgent needs in the face of this pandemic.”
Despite the money being earmarked for students, the $2-trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act put $14-billion to one side for Higher Education Emergency Relief. That’s the money that should be used to help students in financial difficulty, not money from the PPP relief fund.
So despite not needing the money, Harvard took it and are using it for something it wasn’t set up for.
The Steve Sanchez Daily Rant: Listen Now
Return Relief Funds Now
There is no denying, most companies need assistance during this lockdown. Yet those with high valuations, that took from a relief fund for small businesses are showing nothing but greed. Especially as relief programs are set aside for big businesses and institutes.
Some will do the right thing and return relief funds voluntarily like Shakeshack. Others, like DMC Global (market cap $405-million), Wave Life Sciences (market cap $286-million), and Mannkind Corporation (market cap $273-million) may need more encouragement.
The truth is we don’t know who will return funds.
From the list of companies who have received PPP, which was meant to be for small businesses, 75 had publicly traded. Together these companies have taken more than $365 million in low-interest, taxpayer-backed loans, that should have gone to others who needed relief funds more urgently.
The Small Business Administration (SBA) reported that 4,400 of the PPP loans made exceeded $5-million. The average for a small business is usually around $206,000.
Howard Schultz, a former Starbucks chairman, and CEO said: “I think you’ve seen some pretty shameful acts by some large companies to take advantage of the system.”
You know it’s bad when someone from Starbucks is calling out other businesses as being shameful.