More chain restaurants returning coronavirus small-business loans
Combined, Sweetgreen and Kura Sushi returned about $16M to the relief fund
Heritage Foundation president Kay C. James calls for additional Paycheck Protection Program funding for small businesses struggling during the coronavirus pandemic.
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Two more chain restaurants in the U.S. announced plans Thursday to return federal small-business loans after growing outrage from policymakers and business owners over publicly traded companies tapping the government-backed aid.
Sweetgreen, a salad chain with more than 90 stores across eight states, said it would return a $10 million loan it received under the Paycheck Protection Program, while Kura Sushi, a 25-restaurant chain based in Irvine, California, is canceling the $5.58 million that it accepted.
“At the end of last week, we were approved for a $10M loan through the program. 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. Knowing that, we quickly made the decision to return the loan,” Sweetgreen co-founders Nicolas Jammet, Jonathan Neman and Nathaniel Ru wrote in an open letter posted on the company’s website.
Sweetgreen, based in Los Angeles, is a private company, but was valued at an estimated $1.6 billion in September.
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In a similar statement, Kura Sushi CEO Jimmy Uba said the company was unaware of how intense the competition for a loan would be, noting that he assumed the program had enough cash to cover restaurant employees throughout the country.
Uba said this was a “wrong assumption,” and in a filing with the Securities and Exchange Commission, the company said it was returning the money.
“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,” Uba said. “We hope that these funds will be shared equitably among deserving candidates.”
Kura, which is publicly traded, is worth more than $90 million. Earlier in the month, the company disclosed that it had $24 million in cash reserves, along with a $20 million loan from its Japanese parent company, Kura Sushi, Inc. The restaurant closed all of its stores on March 18 and has been unable to offer takeout or delivery.
The decisions to return the aid echo a move by Shake Shack earlier this week to give back the $10 million loan it received after raising additional capital from investors.
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When Congress created the $349 billion Paycheck Protection Program in the stimulus plan approved last month, it targeted companies with fewer than 500 employees. But restaurants and hotels were granted some flexibility in the legislation — so long as they employed no more than 500 workers at any single location, they could apply for the aid.
The result has been a growing backlash over the program, which granted multimillion-dollar loans to major restaurant chains like Potbelly and Ruth’s Chris Steak House, even as small business owners struggled to access the aid.
At least 75 publicly traded companies — some with market values of well over $100 million — tapped the government-backed loans, receiving a combined $300 million in low-interest loans, according to a recent Associated Press analysis.
The loans were among the 4,412 approved by banks and the Small Business Administration worth $5 million or more, according to SBA data. The total amount of loans approved for at least $5 million totaled $30.9 billion — or about 9 percent of all those approved. The size of the typical loan nationally was $206,000, according to the data.