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NEW YORK (CNN) – Shake Shack is repaying a $ 10 million loan it received from the U.S. government as part of an emergency program touted as a way to help small businesses pay workers and maintain their operations during the coronavirus crisis.
The hamburger chain obtained the loan under the Paycheck Protection Program (PPP). The $ 349 billion stimulus package, overseen by the Small Business Administration (SBA), ran out of funding last week.
Over the past few days, there has been a growing backlash over the distribution of funds. Several media outlets have revealed how much of the package is being absorbed by restaurant chains, hoteliers and publicly traded companies, rather than small local businesses.
Shake Shack CEO Randy Garutti and Chairman Danny Meyer on Monday revealed their decision to repay the funding in an open letter, saying the NYSE-listed company no longer needed the money because it had “lucky to now have access to capital that others don’t have.” The company said in a filing Friday that it expects to be able to raise up to $ 75 million from investors by selling stocks.
Executives also shared their frustrations with the PPP, arguing that many restaurants had been unfairly left out because the program “came without a user manual and was extremely confusing.”
Garutti and Meyer are now asking the SBA to increase funding for the program. They also want the US agency to designate a local bank to work with each applicant, facilitate the process, and relax the forgiveness policy.
Union Square Hospitality Group, another food and beverage company independently run by Meyer, received “some” of the loans it applied for, executives said. They said all of those restaurants closed last month and the company was forced to lay off more than 2,000 workers. They did not say whether that company would return funds as well.
An agreement for additional PPP funding, meanwhile, could be announced soon.
President Donald Trump said at a coronavirus task force briefing on Sunday that “we continue to negotiate with Democrats to ensure that our great workers and small businesses across the country are taken care of.”
“I think we are getting closer to a deal. It could happen. It could happen, ”Trump said. “A lot of good work is going on and we might have an answer tomorrow and we’ll see what exactly happens.”
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