Treasury Secretary Steven Mnuchin will come under tough questioning from senators Tuesday. Issues have been brought up about a small business lending program included in the government’s $2 trillion relief package.
Lawmakers from both sides of the aisle have criticized the Payroll Protection Program. It initially provided $349 billion in forgivable loans to small companies but has been plagued by a host of problems.
Many businesses were unable to get loans before the initial funding was exhausted. In addition, a second round of loans faced computer processing delays. However, a number of publicly traded companies ended up receiving money that Mnuchin demanded be paid back to the government.
Mnuchin said that so far, the paycheck program has processed more than 4.2 million loans for over $530 billion “to keep tens of millions of hardworking Americans on the payroll.”
The loans do not have to be paid back as long as the borrowing business uses 75% of the money to cover workers’ paychecks.
But many small firms say the terms are too difficult. To get the loans forgiven they have to rehire all their employees within eight weeks of receiving the funds.
Firms argue they may simply have to lay their workers off again at the end of the eight weeks when the money potentially runs out.
Mnuchin also said that the $1,200 stimulus checks from the relief package have added up to $240 billion in direct payments for millions of Americans, with a typical family of four receiving $3,400.
Treasury said that this week that it is sending out nearly four million payments on prepaid debit cards. The payments were approved in late March and Treasury warned that it would take time to issue the funds to those without bank accounts.
A separate congressional oversight panel said that the Fed and Treasury have spent very little of the $500 billion that Congress allocated. The oversight panel also asked how the two agencies would evaluate the success of their programs.