US private schools told to return virus rescue loans

Steven Mnuchin, the Treasury secretary, on Friday morning said wealthy US private schools should give back loans claimed under the Paycheck Protection Program, the scheme designed to help small establishments survive the coronavirus crisis.

In a tweet on Friday morning, Mr Mnuchin said: “It has come to our attention that some private schools with significant endowments have taken [PPP] loans. They should return them.”

Mr Mnuchin’s comments followed a report in the New York Times this week pointing to Sidwell Friends, a private school in Washington attended by former president Barack Obama’s daughters, and St Andrew’s Episcopal School, where President Donald Trump’s son Barron is a student, as recipients of PPP loans.

The Los Angeles Times separately reported that Brentwood School, a private school in the city attended by two of Mr Mnuchin’s children, also received a loan under the programme. Monica Crowley, Mr Mnuchin’s spokeswoman at the Treasury, said in the article that he had “no knowledge” that the school had taken out a government loan.

Sidwell said in a statement: “Out of a commitment to our faculty and staff, Sidwell Friends School applied and was approved by the Small Business Administration for a PPP loan. If the government changes the terms of the programme, the school will review any new rules and comply accordingly.”

The other schools named did not respond immediately to a request to comment.

Since its launch last month, the Paycheck Protection Program has been criticised for allowing large and financially secure businesses to access loans, crowding out smaller ones.

The scheme was launched in early April, and its initial funding of $349bn ran out within 12 days as businesses rushed to take advantage of the loans on offer. Congress has since topped up the fund with an additional $310bn, but critics say that part of the reason it is running out so quickly is that well-funded institutions are claiming the money before others have a chance.

Several restaurant chains have handed back their loans, including Potbelly, Shake Shack and Ruth’s Chris Steak House.

The Treasury and SBA, which are running the programme, have made changes to the rules in response. Most recently, they announced businesses would have to provide an assurance that they could not access money from elsewhere, adding that any enterprise that claimed more than $2m would be audited afterwards.

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