NEW YORK, USA – Upscale burger chain Shake Shack said it had returned $10 million received from a United States small business loan program, raising fresh questions about how the emergency financing is being managed as Congress negotiates over adding funding.
Shake Shack said Sunday night, April 19, it returned the loan it had received from the Small Business Administration (SBA) under its Paycheck Protection Program (PPP), which ran out of funds last week after the agency committed $349 billion in less than 14 days amid massive demand from companies battered by coronavirus shutdowns.
Treasury Secretary Steven Mnuchin, who is working with Washington lawmakers to boost funding for the PPP, said on Twitter on Monday, April 20, he was "glad" that Shake Shack returned the funds.
The program has been touted as a lifeline for mom-and-pop businesses and their workers, but has faced questions about whether too much of the money is going to better-connected businesses, shutting out the most vulnerable firms.
Shake Shack is publicly traded and has grown quickly into a worldwide chain of 275 restaurants with $575 million in sales last year, with a menu touting antibiotic-free meat and fresher ingredients.
Businesses with fewer than 500 employees can apply for the PPP, which covers 8 weeks of payroll or rent and converts to grants if companies maintain their employees or rehire laid-off workers by June 30.
But Shake Shack, which has nearly 8,000 US workers, was able to qualify for the loan because individual restaurants only have about 45 employees, the company's leaders said in a statement posted on LinkedIn.
The company applied "to protect as many of our employees' jobs as possible," Shake Shack chief executive Randy Garutti and chairman Danny Meyer said in the message, adding that they were facing operating losses of $1.5 million per week.
Garutti and Meyer said they did not realize until last week that the PPP funds would run out and opted to return the $10 million after they obtained financing from private sources.
"We've decided to immediately return the entire $10 million PPP loan we received last week to the SBA so that those restaurants who need it most can get it now," they said, as they called for more funding for the program.
The PPP's establishment represents a rare case of bipartisan comity in Washington, but lawmakers have haggled over the terms of boosting funding.
The White House and congressional Democrats said on Sunday they could reach an agreement soon on expanding funds to small businesses devastated by the coronavirus.
Mnuchin said Sunday the administration was proposing an additional $300 billion for the program. – Rappler.com