- Sweetgreen announced on Wednesday that it had returned a $10 million paycheck protection program loan aimed to support small businesses during the coronavirus pandemic.
- Conveyor belt sushi chain Kura Sushi also announced it would return its $6 million PPP loan on Wednesday, after chains received backlash for getting loans through the program.
- PPP loans are aimed at small businesses, but the program included an exception for restaurants of all sizes as the industry struggles during the coronavirus pandemic.
- Chains such as Ruth's Chris and Potbelly received backlash after receiving multi-million dollar PPP loans before funding ran out, leaving many small businesses unable to obtain loans.
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Sweetgreen revealed on Wednesday evening that it received and returned a $10 million loan from a program aimed at small businesses.
"At the end of last week, we were approved for a $10M loan through" the paycheck protection program, the co-founders of the popular salad chain — Nicolas Jammet, Jonathan Neman, Nathaniel Ru — wrote in a Medium post.
"That same day, we learned that the money had run out and so many small businesses and friends in the industry who needed it most did not receive any funds," the post continued. "Knowing that, we quickly made the decision to return the loan."
The co-founders said that they had planned to use the loan to pay people in restaurants and hire back furloughed employees, describing COVID-19 as an "existential threat for many of the small businesses and restaurants."
Kura Sushi, the largest conveyor belt sushi chain in the US, also announced that it would return its nearly $6 million loan. The company said that it had hoped to use the loan to rehire employees, as the sushi chain has furloughed 35% of its workers.
"We never considered how intense the competition for the loans would be and applied for one immediately, so that we could continue paying our employees even though all of our stores were closed," CEO Jimmy Uba said in a statement on Wednesday. "We were genuinely excited for all restaurants."
However, Kura Sushi and other chains faced significant backlash when PPP funding ran out after two weeks before many small businesses received loans. Shack Shake announced on Sunday evening that it would return a $10 million loan after seeing severe criticism for getting funding from the program, which was intended primarily to help small businesses.
"Today, we made the decision to return our PPP loan," Uba said in Wednesday's statement. "This was a difficult decision because our employees are extremely important to us, but it's impossible to ignore the fact that our finances allow us to weather financial hardship for a longer period than independent restaurant owners."
Even the largest fast-food giants could technically qualify for a PPP loan, due to a loophole in the program
While the PPP loans were aimed at small businesses, the program contained an exception for all restaurant and hotel groups. As a result, even the largest chains in the industry technically qualified for a loan of up to $10 million.
The restaurant and hotel industries lobbied for the loopholes because they are being hit particularly hard by the coronavirus pandemic, as potential customers shelter in place at home.
Eight million restaurant workers have been laid off or furloughed, with roughly two out of three employees out of a job due to the pandemic, according to the National Restaurant Association. In early April, UBS said that up to one in five restaurants in the US could close due to the coronavirus pandemic.
The PPP loans brought significant baggage to the chains that received them. More than 245,000 people have signed a Change.org petition calling for Ruth's Chris to return the $20 million it received through the program.
Treasury Secretary Steven Mnuchin warned of "severe consequences" for large companies that received PPP loans in a White House briefing on Tuesday. According to SBA data, almost half of the allotted $350 billion was paid out in loans of $1 million or more, even though these larger loans made up just 4% of accepted applications.
On Tuesday evening, the Senate passed a second infusion of $310 billion into the paycheck protection program. The House is expected to approve the replenishment as early as Thursday.
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