Mnuchin to face grilling about small-business lending effort

WASHINGTON (AP) — Treasury Secretary Steven Mnuchin will likely come under tough questioning from senators Tuesday about a small business lending program included in the government's $2 trillion relief package.

Lawmakers from both parties have criticized the Payroll Protection Program, which 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. A second round of loans faced computer processing delays and a number of publicly traded companies ended up receiving money that Mnuchin demanded be paid back to the government.

Mnuchin and Federal Reserve Chair Jerome Powell will testify Tuesday at 10 a.m. before the Senate Banking, Housing and Urban Affairs Committee. The hearing is the first oversight review of the huge relief legislation approved in early March.

Mnuchin said in prepared testimony 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 onerous. To get the loans forgiven they have to rehire all their employees within eight weeks of receiving the funds, even if they have little business or work for them to do. These firms argue they may simply have to lay their workers off again at the end of the eight weeks, and have little money left to help them ramp up when business does return.

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. Late Monday,...