By Joshua Huff, sports editor
The Small Business Administration Covid-19 relief loan that was intended to prop up businesses finacially devastated by the coronavirus pandemic ran out of funds in less than two weeks of existence.
The Paycheck Protection Program (PPP), which is a $349 billion stimulus effort heralded as a means to help the nation’s small businesses pay their workers and keep their operations running, ran out of money this past week with many small businesses that were approved for funding receiving nothing.
One of the main contributors to the program running out of funding is major U.S. restaurant chains gobbling up large chunks of funding from a program intended to protect small businesses during the pandemic.
Behind a fierce lobbying campaign, many national chains received PPP loans upwards of $10 million. Those loans intended to keep small businesses afloat instead went to major companies like Shake Shack, Ruth’s Chris, Potbelly Sandwich Shop, Taco Cabana, J. Alexander’s, the coal company, Hallador Energy, and the largest sushi chain in the nation, Kura Sushi USA Inc., among others.
Shake Shack announced on Monday that it would return the $10 million it received. The company reportedly has more than $100 million in cash on hand and employs nearly 8,000 people at its 189 U.S. restaurants. Its revenue for the first quarter of 2020 was $143 million.
The ability of major companies to receive funding before smaller businesses has become the latest problem with a program that has provided no relief for many small businesses following it launch on April 3.
Shake Shack CEO Randy Garutti and Chairman Danny Meyer said the program “came with no user manual and it was extremely confusing.”
“Big Wall Street-backed restaurant chains that pay their executives super-sized bonuses should not be the first served up SBA loans by this administration,” Derek Martin, a spokesperson for the watchdog group Accountable US, told Politico. “What a slap in the face to the untold thousands of legitimate small businesses that will not survive this crisis, many because they couldn’t get the help they were promised from the president soon enough, if at all.”
On Thursday, April 16, the Small Business Administration announced that it had approved more than 1.66 million loans for more than $342.2 billion. According to the agency, 4,412 of those loans were distributed for more than $5 million. The SBA indicated that 1.1 million applications were approved by April 14 for $263 billion, with the average loan size roughly $239,000.
Amanda Fischer, policy director at the Washington Center for Equitable Growth, told Politico that the definition of what qualifies as a small business has made who receives the funding all that more difficult.
“If policymakers’ responses to the coronavirus recession reinforce rather than mitigate the trend toward the increasing concentration among large firms and declining small business dynamism, then our country will emerge more fragile, more concentrated and less equitable than it was before,” Fischer said.