Shake Shack to return $10 million government loan intended for small businesses - Latest News

Shake Shack is returning $10 million it received from a federal loan application meant to aid tiny businesses amid the ongoing coronavirus pandemic, the favorite burger chain declared in a announcement late Sunday.

“Our folks would gain from a $10 million [Paycheck Protection Program] loan but we’re lucky to now have access to capital that others do not,” the company’s executives, Danny Meyer and Randy Garutti, wrote in a letter shared on LinkedIn. “Until each restaurant that needs it has had the exact same chance to get assistance, we’re returning ours.”

The decision comes soon after Shake Shack was identified in recent media reports as among numerous big businesses with revenue of more than $100 million who obtained loans from your Paycheck Protection Program, which maxed out last week and is no longer accepting claims. The $350 billion lending program, a fundamental portion of this massive $2.2 trillion stimulus passed each month, is meant to incentivize small businesses to keep individuals employed through loans that are forgivable if the employees are kept on payroll, based on this Small Business Administration.

But as CNN reported over the weekend, scores of small companies have had their loan applications rejected while bigger companies such as restaurant chains, hoteliers and other publicly traded businesses have received amounts from the millions.

In Sunday’s letter, Meyer, Shake Shack’s creator, and Garutti, the CEO, explained that the series originally applied for federal assistance because it qualified under a stipulation that loans could be paid out to some restaurant location with no longer than 500 employees. Though Shake Shack has 189 locations, each individual restaurant just employs about approximately 45 people, the letter said.

“The’PPP’ came with no user manual and it was extremely confusing,” Meyer and Garutti wrote. “The best chance of maintaining our teams working, off the unemployment line and hiring back our furloughed and laid off workers, is to employ now and hope things could be explained in time.”

The hamburger chain was not the only large restaurant business to gain from this program, CNN reported. Potbelly Sandwich Shop, Ruth’s Chris steak houses, and Kura Sushi USA Inc., one of the biggest sushi chains in the country, among others, all received large loans, according to CNN.

Meyer and Garutti stated Sunday that they were not aware the federal program could be overwhelmed so quickly and acknowledged the outcry coming from independent companies which were not able to secure loans. The decision to go back the $10 million loan has been created instantly after Shake Shack guaranteed separate funding last Friday”needed to make sure our long-term stability,” the letter said.

The two executives moved on to urge Congress to make sure that moving forward the program is adequately funded, writing,”It is inexcusable to leave restaurants outside because no one told them to get in line by the time the funds dried up”

“If this health disaster and the related economic shock has taught us anything, it’s that we are all in this together,” Meyer and Garutti wrote. “their employees are craving the moment when we can safely be back in business and bring our guests back to the dining table. With adequate funding and a few crucial tweaks, the PPP application can offer the economical spark the entire industry should get back in business”