Private schools that tapped coronavirus small business relief fund should return aid, Mnuchin says
The program has been criticized heavily for granting loans to big, public companies
Treasury Secretary Steven Mnuchin says any company which received a small business loan larger than $2M may be subject to criminal liability if dishonest about need for coronavirus relief.
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Treasury Secretary Steven Mnuchin on Friday urged private schools that tapped a relief fund designed to help small businesses weather the coronavirus pandemic to return the money.
"It has come to our attention that some private schools with significant endowments have taken #PPP loans," Mnuchin wrote on Twitter. "They should return them."
Congress created the $349 billion Paycheck Protection Program, an integral part of the massive stimulus package passed in March, to help businesses with fewer than 500 workers. If companies spend at least 75 percent of the money on maintaining payroll, the government will forgive it.
But the loan program, which resumed Monday morning after lawmakers injected it with an additional $310 billion, has been criticized heavily for granting loans to big, publicly traded companies — even as small businesses languished.
Among the elite private schools that received loans through the taxpayer-funded program include St. Andrew's Episcopal School in Potomac, Maryland, where President Trump's youngest son is a student, according to The New York Times.
St. Andrew’s, which reported a roughly $9 million endowment in a 2017 tax filing, said it intended to keep the money and would put it toward salaries “to ensure retention of our full faculty and staff, including hourly employees and coaches, during this very challenging and uncertain time.”
"We hope every other nonprofit and small business is able to access” the aid, a spokesperson for St. Andrew's told the Times.
Tuition at the school ranges from $36,990 for the lower school (kindergarten through grade five) to $44,590 for the upper school (grades nine through 12).
Sidwell Friends, Chelsea Clinton's alma mater, said in a memo to the school community that it would receive a $5.2 million loan through the fund "in light of actual and anticipated shortfalls, mounting uncertainty" and the "importance of maintaining employment levels," the Times reported. The school has a $53.4 million endowment and costs about$44,940 for lower school and $46,490 for upper school.
The Pingry School, with a roughly $80 million endowment, said it would keep the money it had received through the PPP to pay faculty and staff members. The federal program was designed to help businesses maintain payroll throughout the coronavirus pandemic, which has forced an unprecedented shutdown of the nation's economy. The school, which has two campuses in New Jersey, did not disclose how much money it received. It charges $36,152 for lower school and $42,493 for upper school.
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John Burroughs School near St. Louis received a $2.55 million loan and said it intends to keep the money to avoid furloughs for its more than 200 employees. Before the pandemic, the school relied on a roughly $54.7 million endowment; but as the virus sent stock markets tumbling, the endowment has shed about $9 million. Tuition is $30,300.
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“The school has never applied for federal funding before, and we are extremely grateful to qualify for this loan at this unprecedented time to ensure we can support our employees, and our ongoing operations in a manner that is not detrimental to the long-term financial health of the school,” Andy Abbott, the head of the school, told the Times.
Among the schools receiving federal aid is Brentwood School, an elite K-12 institution based in West Los Angeles, according to The Los Angeles Times. Brentwood had an endowment of $17.4 million in 2017, according to an IRS filing.
Tuition at Brentwood ranges from $37,500 a year for students in kindergarten through fifth grade, to $44,000 for the upper school (grades six through 12).
The Treasury Department did not respond to a request for comment.
The Treasury and SBA tightened the rules of the loan program last week, saying that borrowers "must certify in good faith" that their loan request is "necessary." If borrowers accessed the aid before the Treasury issued the new guidance and repay the entire loan before May 7, 2020, it “will be deemed by SBA to have made the required certification in good faith.”
If businesses that don’t meet the necessary certifications received loans and do not repay it, they could be subject to investigation, Mnuchin said.
At least 306 public companies received forgivable loans totaling more than $1 billion through the program, according to Washington D.C.-based data analytics firm FactSquared. Twenty-six companies have returned $167 million in aid.
Mnuchin announced earlier this week that the federal government will perform a full audit on companies that received more than $2 million before the loan is forgiven.
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