Sweetgreen Returns $ 10 Million PPP Loans

Sweetgreen announced on Wednesday that it is refunding the $ 10 million it received from the paycheck protection program.

The Company wrote on medium that the loan was approved on April 16 – the day the $ 349 billion program ran out of money.

The brand said it applied for the loan in response to “dramatically impacted” revenue and put employees on leave.

“We learned that the money was gone and so many small businesses and friends in the industry who needed it most had not received funding,” Sweetgreen founders Jonathan Neman, Nicolas Jammet and Nathaniel Ru said in a statement. We quickly decided to return the loan. “

Many have criticized the paycheck protection program because larger chains can take out loans as opposed to smaller mom and pop stores. Large companies such as Potbelly, Ruth’s Hospitality Group, Shake Shack, Kura Sushi USA and J. Alexander’s announced that they would take out loans.

Before the expiry, more than 1.6 million loans were granted. An analysis by Forbes found that 71 publicly traded companies have received funding. The program is aimed at companies with 500 or fewer employees, but eligibility is based on location rather than total workforce, so larger brands can apply and receive funding.

On Thursday, the Small Business Administration, in partnership with the US Treasury Department, released additional guidance on paycheck protection loans that appear to be preventing larger companies from applying for funds.

The SBA and the Treasury Department published an extensive FAQ that includes: “Do large company-owned companies with sufficient sources of liquidity to support day-to-day operations qualify for a PPP loan?”

In the answer section, the agencies said:

“Borrowers must make this certification in good faith, taking into account their current business operations and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that does not materially affect the business. For example, 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 the basis for its certification upon request . “

Sweetgreen joins Ruth’s Hospitality Group, Shake Shack, Kura Sushi and three other brands that have paid off their loans. Shake Shack returned its $ 10 million loan on Monday, says, “The restaurants that need it most can get it now.”

Ruth’s Hospitality Group decided on Thursday to return $ 20 million in PPP loans in response to the new guidelines. More than 250,000 people have signed a petition asking them to return the loans they received to Ruth’s Chris.

“We wanted to repay this loan in accordance with government guidelines, but when we learned more about the program’s funding restrictions and the unintended implications, we decided to accelerate that repayment,” CEO Cheryl Henry said in a statement. “We hope that this money will be loaned to another company to protect their employees.”

Kura Sushi made its move on Wednesday and reported that it was returning a $ 6 million loan.

“With the Paycheck Protection Program, we assumed that all restaurant employees, regardless of where they work, could continue to be paid and that there would be enough funding for everyone,” said Jimmy Uba, president of Kura Sushi USA, on the restaurant’s website. “That was a wrong assumption.”

“That was a difficult decision, because our employees are extremely important to us, but it cannot be overlooked that our finances allow us to survive financial hardships longer than independent restaurant owners,” said Uba further 65 percent of the workforce on full pay . “We hope that these funds will be distributed fairly among the deserving candidates.”

The SBA and the Treasury Department are giving other large companies the opportunity to take similar steps.

“Any borrower who applied for a PPP loan prior to the publication of these guidelines and who repays the loan in full by May 7, 2020 will be deemed to have been granted in good faith by the SBA,” the FAQ states.

Meanwhile, Potbelly told Crain’s Chicago business that it does not intend to return the money.

“Like many other restaurants, Potbelly has applied for the PPP,” said Matt Reyord, the brand’s chief people officer, in an email. “Every cent is used to financially support the employees in our shops. Congress qualified restaurants specifically for the PPP loan program as restaurant workers are critical to our economy. “

On Tuesday, the Senate passed a bill that would add $ 310 billion to the program. Of that amount, $ 60 billion would be allocated to small and medium-sized lenders who help customers in rural and underserved communities move funds to unbanked businesses.

About Alexander Estrada

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