As lawmakers negotiate a new bill to replenish the $350 billion Paycheck Protection Program (PPP), which ran out of funds last week, one business is returning its loan funds.
In a statement on LinkedIn, Shake Shack announced on Monday that it would return the $10 million it received from the PPP. The founder of the restaurant chain, Danny Meyer, and its CEO Randy Garutti, wrote in the statement that the company was able to secure funding “through an equity transaction in the public markets.”
“Shake Shack was fortunate last Friday to be able to access the additional capital we needed to ensure our long term stability through an equity transaction in the public markets,” the statement read.
It continued, “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.”
Meyer and Garutti wrote that they believed their company, which employs around 8,000 workers, would qualify for the loan — which is for businesses that have less than 500 employees — because its chains across the country typically employ around 45 people, and they wanted to protect their workers.
The PPP did allow larger restaurants to apply and receive funds as well.
However, they said they did not realize how quickly the PPP could run out of money, “There was no fine print, anywhere, that suggested: ‘Apply now, or we will run out of money by the time you finally get in line.’”
They continued:
“When it was announced that funding for the PPP had been exhausted, businesses across the country were understandably up in arms. If this act were written for small businesses, how is it possible that so many independent restaurants whose employees needed just as much help were unable to receive funding? We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance.”
Additionally, they called for Congress to replenish the PPP and make adjustments to it to make it easier for businesses to get the loans.
While they said their employees could “benefit” from the PPP loan, they said they were able to secure funds and would return the loan proceeds to help other businesses.
“Our people would benefit from a $10 million PPP loan, but we’re fortunate to now have access to capital that others do not. Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours.”
Treasury Secretary Steven Mnuchin weighed in on Shake Shack’s announcement in a tweet, “I was glad to see that [Shake Shack] will be returning the [PPP loan.”
I was glad to see that @shakeshack will be returning the #ppploan #CARESAct @SBAgov
— Steven Mnuchin (@stevenmnuchin1) April 20, 2020
The company’s decision to return the funds come as Congressional leaders appeared to be nearing a deal on a new bill to replenish the program.