In March 2020, due to COVID-19’s effect on the economy, Congress passed a small-business bailout known as the Paycheck Protection Program or PPP. PPP was funded with $350 billion to loan to endangered small and medium-sized companies. This money was supposed to be enough to cover two months of payroll and operations. Within two weeks of giving out these loans, the pot quickly ran dry.
Many large companies like Ruth’s Chris Steak House, Potbelly Sandwich Shop, Shake Shack, and Sweet Green were selected to receive millions of dollars in loans.
Shake Shack, an international fast-casual burger chain, received $10 million from the PPP on April 10, according to its Securities and Exchange Commission filing. You may ask how a large chain could be awarded a small business loan since Shake Shack has more than 6,000 employees. They qualify for this small business loan because the PPP applies to companies that don’t have more than 500 people in one location, each location roughly has 45 team members.
The Shake Shack team has decided to return the loan. Randy Garutti, CEO at Shake Shack, and Danny Meyer, Founder, and Chairman of Shake Shack wrote this letter to the public. In the letter, they say, “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.”
Sweetgreen joined Shake Shack in returning the money after the backlash surrounding the program. Sweet Green, the high-end salad chain, is returning a $10 million loan it received from the US government to help it weather the coronavirus pandemic. In a letter from their founders, they explain.
“At the end of last week, we were approved for a $10M loan through the program. That same day, we learned that the money had run out and so many small businesses and friends in the industry who needed it most did not receive any funds. Knowing that, we quickly made the decision to return the loan.”
Several media outlets have exposed how large sums of money from the program were taken up by chain restaurants, hoteliers, and publicly traded corporations, rather than small, local businesses. Lawmakers are currently working on a new small business relief fund, so we will have to wait and see how the additional funds are distributed.