After great public outcry that large publicly-traded companies, many of them chain restaurants, received almost all of the $349 stimulus funds created by Congress in the March 30th CARES act, the Treasury Department has asked them to reutrn the money. Large companies gobbled up funds that were originally intended for small businesses affected by the pandemic. Small usually means employers with fewer than 500 employees; however, the CARES act's loophole allowed companies to acces the funds if they had fewer than 500 employees per location.
Amidst public pressure, Shake Shack returned their $10 million loan to the Paycheck Protection Program, but Ruth's Chris and Potbelly initially refused. Under the new Treasury guidance, PPP borrowers must certify "in good faith" that they absolutely need the loans to keep operating, and they must account for all aspects of their business activity and inability to access other sources of capital. They have until May 8th to make this testament or repay the loan in full. It is highly "unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith," said one business expert. The majority of companies who originally borrowed the funds, including Ruth's Chris and Potbelly, issued public statements that they would repay the money to the Treasury.
Small businesses hoping to access the Paycheck Protection Program should immediately reach out to their bank, but be aware they may only be accepting a few applications because there are a queue of businesses who applied in early April. Information about the PPP program is here.
- Publicly Traded Companies Have 2 Weeks to Give Back PPP Loans
- Ruth's Chris Will Return Its PPP loans after Public Outcry
- New $310 billion stimulus funds may be already accounted for
- Frequently Asked Questions On Small Business Loans In Coronavirus Relief CARES Act
- How to Calculate Payroll Costs For Your Paycheck Protection Loan
- Wait for the PPP Lapse in Appropriations to End Before You Apply