WASHINGTON ― As a result of fewer than 20 corporations sought to use for $17 billion in federal loans for Protection Division suppliers harm by the coronavirus pandemic, the Trump administration is weighing how one can broaden the eligibility necessities, a high Pentagon official mentioned Thursday.
“The challenge is that this $17 billion worth of loans comes with some fairly invasive kind of riders, and I think companies have to think very carefully about whether that makes good business sense for them,” Below Secretary of Protection for Acquisition and Sustainment Ellen Lord mentioned at a Pentagon information convention.
Treasury Secretary Steven Mnuchin, whose company is implementing the loans, is requiring public firms in search of a share of $17 billion in coronavirus-related reduction provide an fairness stake to the federal government.
“It may not be as interesting as for private companies, so that’s one of the differentiators I see,” Lord mentioned.
The loans had been meant for firms working high secret services and with DX-rated contracts, which suggests the Pentagon deems them of highest nationwide precedence.
“I am not sure that companies with DX-rated contracts are the ones that have the most critical needs. They have had a little less than 20 companies reach out to date,” Lord mentioned.
The Treasury Division has been in session with the Pentagon, and it’s been open to methods the loan program might be expanded ― doubtlessly to corporations the Pentagon designates, Lord mentioned.
“So I’m hoping that early next week, between the Treasury Department and the Department of Defense, we can come back with a little bit more fidelity to the defense industrial base to better identify who might most benefit from this particular money,” Lord mentioned.
The company had set a Could 1 deadline for functions.
The $17 billion tranche within the CARES Act for COVID-19 reduction was extensively assumed to be focused at Boeing, which is a chief protection contractor and had indicated that it’d search help. Nonetheless, U.S. lawmakers have mentioned the loans are meant to span the protection provide chain, mentioned Andrew Hunter, director of the Middle for Strategic and Worldwide Research’s Protection-Industrial Initiatives Group.
“I would just say the requirements under that program are pretty strict that,” he said. “You have to be really in desperate need for financing and have no access to other forms of financing, you have to accept a lot of limits on how the business operates: [on] share buybacks, dividends, executive compensation. And so it’s really been designed and set up as a lender of last resort to firms that really need that assistance.”