Senate Finance Committee Chairman Sen. Chuck Grassley (R-Iowa) said large chain restaurants shouldn’t have received money under the government’s small-business aid scheme.
Large restaurant chains have faced backlash after receiving more than $80 million in COVID-19 relief loans intended for small businesses, while the total amount of $349 billion under the stimulus program ran out last week.
“They should not have gotten it, because they had more than 500 employees. They could have legitimately got some help from another government program. … They should have gone to the Federal Reserve to get it, and not got it from the small-business program,” Grassley told C-SPAN on April 21.
He was responding to questions about Shake Shack and Ruth’s Chris Steak House, which both disclosed recently that they had received millions of dollars in loans under the Paycheck Protection Program (PPP). The scheme, which is part of the $2.2 trillion COVID-19 relief bill, was devised as a way to help small businesses with fewer than 500 employees to weather the economic fallout due to the outbreak of the CCP virus, commonly known as novel coronavirus.
Virus-driven shutdowns have disrupted economic, social, cultural, and religious life and plunged the world into a deep economic slump unseen since the 2008 financial crisis.
Big companies were able to apply for the PPP relief loans under an exemption allowing restaurants and hotels to apply for the funds as long as they didn’t have more than 500 employees at one location.
Shake Shack, which has more than 200 branches, received $10 million under the PPP. Ruth’s Chris Steak House, with 150 locations, received $20 million in loans.
“We are seeing tremendous backlash because hundreds of thousands of small businesses have not gotten PPP loans,” Chris Allieri, the founder of communications consulting firm Mulberry & Astor, told Business Insider. “Many have had to cease operations because they can’t wait until the next pot of money is approved.”
Treasury Secretary Steven Mnuchin told CNN on April 19 that a deal being discussed with Congress would include $300 billion more in PPP funds.
Senate Minority Leader Chuck Schumer (D-N.Y.) said he believes the Senate will pass a bill with the additional PPP funds on April 21, making it the fourth stimulus package intended to offset economic losses amid the pandemic.
Shake Shack, meanwhile, said it would return its $10 million PPP loan, making it the first major firm to return the money intended to help small businesses ride out the impact of the outbreak.
Shake Shack CEO Randy Garutti and founder Danny Meyer said in a blog post on April 20 that they would give back all the money, adding that they had no idea that the program would run out of money so quickly and that they were sympathetic to the outcry.
“We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance,” the executives wrote.
According to Business Insider, other large restaurant chains that received PPP funds include Potbelly, Ruth’s Chris Steak House, Taco Cabana, Fogo de Chao, J. Alexander’s, and Kura Sushi.