Don't take 'free' paycheck protection money if coronavirus doesn't threaten your business

Juleanna Glover, Opinion contributor

The U.S. government intends to publish the employer identification numbers, also known as tax ID numbers or TINs, of businesses that participate in the new   Paycheck Protection Program in response to the economic damage done by COVID-19. NBC News’ Senior Business correspondent, Stephanie Ruhle, tweeted Friday she will “search…until my last breath on Earth” to match the publicly disclosed EINs of loan recipients with the owners of hedge funds, private equity funds and the wealthy. She added, “these loans aren’t for you.” 

And she’s right. The PPP isn’t meant for businesses and wealthy owners that are not facing a manifest threat due to COVID-19. Nor is it meant for well-capitalized and financed businesses, as Senate Small Business Committee chairman Marco Rubio pointed out on Ms. Ruhle’s show that same day. Applicants for the PPP loans must attest that the “current economic uncertainty makes this loan request necessary to support the ongoing operations.” 

Don't take advantage of the program

The term “necessary” is operative here. And applicants need not prove necessity in the application process, but the intent is clear: If the loans aren’t necessary to maintain your payroll or pay expenses in the midst of this global crisis, don’t apply. The COVID-19 outbreak will certainly impact every business in America, if not the world, but owners of businesses facing negligible impacts should weigh the risk of the reputational damage that comes with disclosure of PPP participation, especially for those owners known for their net worth in local communities.

Local media, competitors and customers could all find out eventually, and public shaming will be rife. Many with the balance sheets to weather the crisis may find the PPP hard to resist. The loans will be converted to grants — “free money” — if you rehire employees or keep your employees during the eight weeks after the loan arrives in bank accounts. 

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But business owners not measurably impacted by COVID-19 should forswear this “free money.” If your business doesn’t need to fire or furlough any employees during the next few months of the COVID-19 outbreak, then you should leave the money for those truly in need. And the need will be great. Roughly $100 billion in applications were approved as of Wednesday. With a current cap of $349 billion as authorized under the CARES Act, the PPP fund will be tapped out in the next few weeks. Both parties in Congress have already signaled they intend to replenish the fund in the next round of stimulus. One can bet that the first in line so far are among the better-resourced business owners. Among those banks participating so far, most have not opened applications beyond current business account customers with pre-existing lending relationships. Many small businesses in America have not gone through the hassle of opening business banking accounts, much less formal lines of credit; they run their businesses off their personal checking accounts.  

Your participation is searchable 

There will certainly be the collective pressure of “everyone’s doing it,” but your employees, your customers, and your neighbors will remember if you take advantage of this program unnecessarily. Your participation in the program could be Google-able. Many EINs are publicly available due to SEC regulations. Many states make EINs more accessible than others. As a test, I was able to instantly match a Virginia based EIN, but Washington, D.C. required a service that would take a few days. And there are websites that match EINs with owner’s names.

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In the coming months, there will certainly be a cottage industry of government oversight groups cataloging EINs matched with PPP recipients, making Ms. Ruhle’s promise to name and shame PPP abusers easy to fulfill. Following the 2008 financial crisis, the government also published bailout recipient details which led to endless publicity many of those companies would have preferred to do without. Ms. Ruhle says the Small Business Administration will follow this precedent for the PPP.

In North Andover, Mass.

This is the worst global crisis since World War II. Individual acts of ethical appropriateness taken in the aggregate will be the economic foundation of what comes next. Those businesses well-capitalized or backed by wealthy owners should certainly not be piling on to the trillions of government debt racked up during this tragedy. 

We must defeat both: Coronavirus pandemic and economic damage ravaging America are twin foes.

While there are blatant examples of self-enrichment and self-dealing by the businessman at the highest level of our government, better off business owners should set a different example; not only to sleep better, consciences at ease, but to avoid being made famous for their selfishness if they don’t.

Juleanna Glover is a public affairs advisor to corporations and has worked as an adviser to many Republican politicians. She is on the board of the Biden Policy Institute. 

This article originally appeared on USA TODAY: Don't take the 'free money' from PPP loan if you don't need it