While millions of small businesses were left waiting in line when the popular Paycheck Protection Program was depleted, a few larger companies were able to land the forgivable loans.
Ruth’s Hospitality Group Inc., owner of the Ruth Chris Steak House chain, has more than 5,000 employees. According to a Securities and Exchange Commission (SEC) filing, it received $20 million in forgivable loans April 7.
Potbelly Corp., a national sandwich shop chain, also was among those landing a loan. In its own SEC filing, the company said it received $10 million April 10.
One big company, however, is saying it will return the $10 million it obtained in Paycheck Protection funds.
"We're thankful for that and 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," Danny Meyer and Randy Garutti, executives of Shake Shack, said in a open letter on LinkedIn Sunday.
“We urge Congress to ensure that all restaurants no matter their size have equal ability to get back on their feet and hire back their teams,” the Shake Shack officers added. “We are an industry of 660,000 restaurants with nearly 16 million employees. While it is heartening to see that an additional $310 billion in PPP funding is about to be approved, in order to work for restaurants, this time we need to do it better.”
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“The company intends to use the entire loan amount for qualifying expenses,” Potbelly Sandwich Works LLC said in an SEC filing. “Under the terms of the PPP (Paycheck Protection Program), certain amounts of the loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.”
Ruth's has similar plans: "In accordance with the requirements of the CARES Act, the company will use proceeds from the SBA loans primarily for payroll costs," the steakhouse said in its own SEC filing.
The loans carry a low one percent interest rate but they are forgiven if business owners use the federal funds primarily to keep staff employed.
While the loans were ostensibly intended for small businesses with fewer than 500 employees, the way the $2 trillion stimulus bill was written does allow large restaurant and hotel chains to participate.
According to the latest Small Business Administration data, 3,273 of the PPP loans were $5 million or more in size.
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