Treasury Department warns large public companies likely won’t qualify for next round of loans

The Treasury Department on Thursday released new guidance on eligibility for an emergency small-business lending program that warns large public companies with ready access to capital likely won’t be able to justify applying for the money.

Treasury said would-be borrowers should carefully examine that the loan will be “necessary to support the ongoing operations” of the business applying for it and that companies need to act in “good faith.”

“For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith,” the department said in an updated list of frequently asked questions.

The $350 billion for the Paycheck Protection Program that was part of a coronavirus rescue package Congress passed last month quickly ran dry.

Some small businesses were left scratching their heads on how major businesses such as the parent company that operates the Ruth’s Chris Steak House chain of restaurants managed to qualify for loans.

Shake Shack announced earlier this week it would be returning the $10 million loan it successfully applied for through the program

Treasury Secretary Steven T. Mnuchin said earlier in the week that more than a million companies with fewer than 10 employees have gotten loans, but that he was pleased to see Shake Shack announce it would return the money.

“The intent of this money was not for big public companies that have access to capital,” Mr. Mnuchin said.

The program provides loans to companies to retain and hire employees and cover overhead. The loans are forgiven if money is used for hiring purposes.

Congress is poised to approve another rescue package this week that will provide an additional $310 billion for the program after Democrats blocked a quick extension of the small business funds.