Chicago-based sandwich chain Potbelly, which offers a signature six-meat sandwich called The Wreck, was turned into a $ 10 million loan through the state Payroll Protection Program (PPP).
Potbelly Corporation announced on Saturday that it would return the money after receiving “further clarification from the Treasury Department” about the loan.
“Potbelly’s sales declined dramatically when COVID-19 hit, forcing us to take employees on leave, close stores, and cut salaries significantly at all levels of the organization. In order to financially support our employees in the business, we applied and qualified for assistance based on the SBA guidelines, ”Potbelly said in a statement. “We were surprised and disappointed when the fund ran out quickly and left many without help.”
The PPP was created in March under the federal CARES law. The loans granted by the Small Business Administration are Designed to help employers keep employees on their payroll throughout the COVID-19 crisis.
However, due to high demand, the program quickly ran out of funding.
The companies that originally participated in the program include large corporations and publicly traded companies. This sparked backlash from both the public and the U.S. Treasury Department, which issued new guidance on Thursday.
According to the revised instructionsWhen it comes to whether “large company owned companies with sufficient sources of liquidity to support day-to-day operations” qualify, borrowers must “confirm in good faith that their PPP loan application is required”.
“A publicly traded company with significant market value and access to capital markets is unlikely to be able to provide the required certification in good faith and such a company should be willing to provide the SBA with evidence of the basis for its certification upon request , “It says in the rules.
Governor JB Pritzker said at his daily coronavirus briefing on Saturday that “companies that don’t need PPP money shouldn’t accept it”.
The governor, a Democrat, said he was “very concerned” about how difficult it was for small businesses to access the program, “because it is really the small businesses in our state that create the most jobs.”
The Illinois Department of Commerce provided $ 90 million to small businesses in the state in grants and loans, he said, but “that’s not enough. I mean, the state can’t do what the federal government can do, and that’s why these federal programs are so important. “
However, Pritzker is under attack from corporate groups on several fronts.
The main battle now concerns a recent relief scheme that could prove costly to businesses. According to this, certain classes of employees – including those who work remotely – are automatically granted compensation payments for employees if they become infected with COVID-19.
Other corporate-backed groups, including those affiliated with Republicans, have said the economic hardship caused by the coronavirus crisis is reason enough to remove a constitutional amendment from the November vote to downgrade Illinois Income tax rates could override.
Critics of the change say it will punish small businesses by charging them for success, that it will create too much uncertainty and will pave the way for higher tax rates in the future.
Pritzker said on Saturday that these critics do not understand how income taxes work.
“People who either break even or lose money this year don’t pay income tax, and people who earn less than they normally (will) pay a lower income tax,” he said. “As I said before, now more than ever, we need a fair tax system for the state of Illinois.”
Pritzkers Illinois Department of Employment Security was also the source of frustration for laid-off workers trying to file claims that were unable to get through.
The governor said Illinois was working to strengthen the website. In order to meet the “extremely high demand” for unemployment benefits, IDES has also implemented a rolling system in which individuals have to submit applications on certain days based on their surname.
In a Saturday morning webinar designed to help guide small business owners through state aid options, Illinois Representative Sean Casten said he was working to secure federal funds for states, including Illinois, to improve the infrastructure of their unemployment benefits programs.
A new round of PPP money will be available on Monday.
Follow Amanda Vinicky on Twitter: @AmandaVinicky