Mnuchin resists changes to small business loans as restaurants protest

Treasury Secretary Steven Mnuchin didn't indicate any willingness to change the terms and put the onus on Congress.

Treasury Secretary Steven Mnuchin on Monday signaled that he will not ease restrictions on how small businesses must use emergency government-backed loans issued to prevent layoffs, amid a lobbying push aimed at giving employers more flexibility.

In a "Fox Business" interview, Mnuchin was asked about pressure he's facing to revise the terms of the Paycheck Protection Program loans, which can be forgiven if businesses agree to maintain their payrolls. The Treasury Department and the Small Business Administration require that businesses spend at least 75 percent of the money to pay workers and do so within an eight-week window to have the loans forgiven.

The restaurant industry is lobbying to ease both requirements, saying the payroll requirement is problematic for businesses with high rent costs and that the window to use the money is unworkable with eateries forced to close their doors across the country. Mnuchin didn't indicate any willingness to change the terms and put the onus on Congress, even though the Trump administration was responsible for the 75 percent payroll requirement.

"This is the way the program was designed by Congress," Mnuchin said. "We think it has the right intent to get the money to employees. So I don't have the flexibility to change that."

He said that if businesses want to use more of the loan funds for overhead costs they can seek an Economic Injury Disaster Loan via the SBA.

Mnuchin also defended a decision by the Internal Revenue Service, which is housed at Treasury, to prevent companies from taking tax deductions for expenses if the spending comes from Paycheck Protection Program loans. Asked about a comment by an unnamed senator that the interpretation goes against the intent of the program, Mnuchin said "that person's just wrong."

"The money coming in the PPP is not taxable," he said. "If the money that's coming is not taxable, you can't double dip."

In response to growing complaints from restaurants about the loan program, Mnuchin said President Donald Trump was "very sympathetic" to the industry and was focused on getting tax incentives for people to start eating out again.

Mnuchin instead said it was important to focus on the "bigger picture" of the 60 million people he expects the loan program will help.

"Some of those may be restaurants that can't open," he said. "A lot of those are restaurants that are ready to open and also restaurants that will do a lot of takeout business."

This weekend, the SBA said it had approved $175.7 billion in Paycheck Protection Program applications from April 27 to May 1 — about 2.2 million loans. That indicated that the program would likely remain open and continue processing applications well into this week. Congress replenished the effort with $320 billion in new funding before the April 27 relaunch, after an initial tranche of funding was exhausted April 16.