April 30, 2020 / 4:31 PM / a month ago

Only 20 U.S. defense contractors consider $17 billion COVID-19 loan pool

WASHINGTON (Reuters) - Fewer than 20 companies are considering applying for $17 billion worth of loans earmarked as relief funds for Pentagon suppliers hit by the coronavirus pandemic, a Pentagon official said on Thursday.

The Pentagon has been working to shore up finances among defense contractors that may have seen a fall-off in non-defense business as quarantining to prevent the spread of the new coronavirus has halted much of the U.S. economy.

“The challenge is that this $17 billion dollars worth of loans comes with some fairly invasive, kind of, riders on it,” Ellen Lord the Pentagon’s chief weapons buyer said in a news conference at the Pentagon on Thursday.

The U.S. Treasury Department will ask for an equity stake in publicly traded national security contractors, including defense firms, that seek part of the $17 billion.

“For public companies it may not be as interesting as for private companies, so that’s one of the differentiators I’m seeing,” Lord said.

According to the loan application, companies with a Top Secret clearance working for the U.S. government and others with contracts related to the defense production act should submit a loan request by May 1.

Lord signaled that the Treasury department was looking for more ideas about what to do with the earmarked $17 billion.

“What Treasury has been very open to, is how they need to expand this.”

Reporting by Mike Stone in Washington, D.C.; Editing by Marguerita Choy

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