Ruth’s Chris Steak House said Thursday it will return the $20 million loan it received from the government’s $350 billion Paycheck Protection Program, which was specifically meant for small businesses struggling during the ongoing economic crisis.
Ruth’s Hospitality Group, which owns and operates more than 100 of the steakhouses across the United States, Canada and Mexico, got two $10 million loans, one for each of its subsidiaries despite being a multimillion-dollar corporation.
The company’s announcement came at about the same time Thursday that the Small Business Administration issued a warning to big-chain companies to prove they were indeed eligible to receive the funds in the first place or repay millions to the government by May 7.
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The Paycheck Protection Program, which launched April 3, is intended to help small businesses with fewer than 500 employees stay afloat.
The program’s initial $349 billion ran out of money last week, and many legitimate small businesses were left empty-handed.
The House has now passed nearly $310 billion in additional funding to the program as part of a new $484 billion relief package that will also shore up hospitals and medical supplies. President Donald Trump was expected to immediately sign it.
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Earlier this week, an Associated Press investigation documented how dozens of publicly listed companies collectively received hundreds of millions of dollars of loans from the program’s first round, which caused an uproar.
According to data compiled and analyzed by AP, through Wednesday at least 147 publicly traded companies disclosed receiving $555 million since the program opened April 3. Some had market values well over $100 million. Many had executives that were paid millions each year.
After a swift public backlash, several companies have announced they’re returning their loans, including the burger chain Shake Shack, which got a $10 million loan.
Kura Sushi, which got nearly $6 million, announced Thursday it would be returning the funds, saying "it’s impossible to ignore the fact that our finances allow us to weather financial hardship for a longer period than independent restaurant owners."
Salad chain Sweetgreen also said Thursday it would be returning its $10 million loan.
Other notable brands on the list included Carrols Restaurant Group, operator of more than 1,000 Burger King franchises; the Potbelly Sandwich Shop chain ($10 million); and J. Alexander's Holdings ($15 million).
The SBA’s new guidelines require companies to certify with their lender that they need the loan and cannot access the money from other sources. Given that public companies have access to capital markets, the SBA says it is unlikely they “will be able to make the required certification in good faith.”
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The initial rules of the program allowed bigger companies such as restaurants and hotels with under 500 workers per location to apply for the loans.
The program approved more than 1.7 million loans. It was clear from SBA data released last week that the agency had approved large loans early in the program, including those that went to big companies. As of April 13, the average size of a loan was nearly $240,000, while by April 16 it had fallen considerably to $206,000 — the result of many more small loans that likely went to small businesses.
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Those large loans meant less money was available for small companies including thousands with applications still pending when the money ran out.
— Information provided by The Associated Press was used to supplement this report.
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