Big companies, like Ruth’s Chris Steak House, received $20 million in forgivable loans which you can see here which is a slap in the face to legitimate small businesses in the United States. The 156-unit chain had sales of over $400 million last year.
The high-end restaurant is among the first publicly-held companies to disclose how much taxpayer-backed funding they received. The parent company, Ruth’s Hospitality Group Inc, received the government-backed loans on April 7.
After public outrage, Ruth’s Chris has agreed to return the PPP loan.
Big Companies Got Loans Meant For Actual Small Businesses And It’s A Slap In The Face
Potbelly Corporation got a $10 million taxpayer-backed forgivable loan from the program on April 10 as you can see in this regulatory filing. Potbelly had annual sales of $410 million last year.
Taco Cabana, owned by parent company Fiesta Restaurant Group Inc., also got $10 million as evidenced in this SEC filing. We just learned Pollo Tropical, who’s parent company is Fiesta Restaurant Group, received $5 million in PPP funds as evidenced by this SEC regulatory filing.
We now know that high-end Brazilian steak house, Fogo de Chao, also received $20 million in taxpayer-backed PPP loans which they secured by applying through two subsidiaries. The restaurant chain has around 40 locations and annual sales of $314.4 million in 2017. CEO Barry McGowan has come under fire for a statement he made saying, “The size of our business doesn’t matter.”
Shake Shack, who was recently granted a $10 million PPP loan, is returning the entire amount and reducing the executive team pay for an definite period as you can read (page 6) in this SEC filing. They announced Sunday that they are laying off 1,000 employees, and continuing to pay all general managers whether or not the restaurant remains open.
Read Shake Shack’s open letter to the public by CEO Randy Garutti and Danny Meyer. We will have more details on this developing story soon.
These loans are administered by the US Small Business Administration (SBA) under the $2.2 trillion coronavirus stimulus bill passed last month.
Originally touted as a way to help small business owners get through the economic shut down, the CARES Act was supposed to provide SBA Economic Injury Disaster Loans and Paycheck Protection Program loans to America’s small businesses. Businesses deemed non-essential had to temporarily close their doors due to the coronavirus shut down in the name of public health.
Under the Paycheck Protection Program (PPP), the government will forgive the loans if the money is used on payroll, rent, or utilities…and provided that workers aren’t laid off.
Potbelly, Ruth’s, Taco Cabana, and Shake Shack are all publicly traded companies, and so their SEC filings are public, however private companies do not have to disclose any loans.
Matt Revord, Potbelly’s chief people officer, told BuzzFeed News in a statement, “Every penny will be used to financially support the employees in our shops. Congress specifically qualified restaurants for the PPP loan program because restaurant workers are vital to our economy.”
It is worth noting that in the very same SEC filing that revealed its PPP loan, Potbelly revealed they had promoted Steven W. Cirulis to the roles of chief financial officer and chief strategy officer. The new role pays him a $425,000 yearly salary, temporarily reduced by 25% due to the coronavirus pandemic. Additionally, Cirulis was awarded a $100,000 sign-on bonus and is eligible for a year-end bonus worth up to 60% of his base salary.
Large Hotels, Restaurants Getting Loans And Asking Congress To Loosen Rules So They Don’t Have To Rehire Employees
And if all this wasn’t enough, large hotels are also getting taxpayer-backed 100% forgivable small-business loans meant for actual, real small businesses.
According to the Orlando Sentinel, a “Pennsylvania investment firm [Hersha Hospitality Trust] that owns the Ritz-Carlton Coconut Grove in Miami has applied for as many as 48 taxpayer-backed loans under an emergency program meant to help the nation’s smallest businesses hang on to their employees through the coronavirus pandemic.
A Maryland hotel company that did more than $1.5 billion in revenue last year has applied for more than 50 loans — and been approved for about 10 so far (as of April 17).”
This is where it gets really good: Hersha Hospitality Trust disclosed in investor filings that it has applied for taxpayer-backed loans for each of its 48 hotels. The company also assured investors before they applied for the loans that it has enough money under a private line of credit with Citbank and Wells Fargo to survive into 2021, even under a “severely disrupted scenario.”
As if this news couldn’t get even more shocking, restaurant and hospitality lobbyists are pressing Congress to loosen the rules about how they spend that money on employees.
Hotels and restaurants have asked to spend less of their PPP loan proceeds on wages for workers and more on other expenses, such as mortgage principal or franchise fees that get paid to larger companies like Marriott International Inc. and McDonald’s Corp.
Texas Roadhouse Top-Ranking Executives Gave Up Salaries, Bonuses To Pay Employees
Some large businesses are doing the right thing. For instance, Texas Roadhouse CEO Kent Taylor recently announced that he will give up his base salary and bonus for the remainder of the calendar year in order to pay “front-line” employees amid the coronavirus pandemic. The amount donated from Taylor will amount to just under $1 million.
Additionally, other top-ranking Texas Roadhouse executives also gave up compensation as evidenced in this SEC filing.
April 6, 2020, Doug Thompson, Chief Operating Officer, elected to forgo his base salary in excess of the amount necessary to cover his required contributions to his employment benefits and related payroll taxes, as well as his incentive bonus.
Both S. Chris Jacobsen, Chief Marketing Officer, and Tonya Robinson, Chief Financial Officer, elected to forgo their respective base salary in excess of the amount necessary to cover their required contributions their employment benefits and related payroll taxes for the second quarter and their respective incentive bonus from the pay period beginning April 1, 2020 and continuing through January 7, 2021.
The additional funds will be made available for a second round of supplemental pay to front-line hourly restaurant employees.
(Texas Roadhouse has no idea we exist, by the way.)
Small Business Administration EIDL And PPP Funds Depleted
UPDATE: Congress just approved another $310 billion for the PPP loan program.
Now that both the SBA EIDL and PPP funds are officially depleted as of Thursday, this has left many small businesses who are at the brink of shuttering their doors feeling as though big businesses were just bailed out.
PPP loans were supposed to be aimed at helping companies with up to 500 employees cover payroll and overhead costs such as rent. Lawmakers then expanded eligibility for restaurants so that these businesses could apply for loans as long as they didn’t have any more than 500 workers at any single location.
Many online expressed that they believed large businesses receiving government-back funding first wasn’t ethical. Joe Gonzales, a private citizen, remarked on Facebook, “I would rather see funds, going to small locally owned shops and businesses first. So many of them are really counting on those funds…Just isn’t right in my book!”
According to the National Federation of Independent Businesses, 90% of US small businesses have been negatively impacted by the coronavirus outbreak. NFIB President Brad Close said the “smallest businesses [were] most disadvantaged.“
We Want EVERY Eligible Small Business To…Get The Resources They Need
SBA Administrator Jovita Carranza and U.S. Treasury Secretary Steve Mnuchin said in a joint statement issued Wednesday that “the SBA has processed more than 14 years’ worth of loans in less than 14 days…The high demand we have seen underscores the need for hardworking Americans to have access to relief as soon as possible. We want every eligible small business to participate and get the resources they need.”
Except that didn’t happen.
With $350 billion in funding now used up, this leaves millions of real small businesses owners in the United States at the very real risk of losing their livelihoods, permanently laying off staff, and even filing for bankruptcy.
The SBA and Treasury Department claim the PPP worked as intended, channeling money to small businesses rather than big corporations. “The vast majority of these loans—74% of them—were for under $150,000, demonstrating the accessibility of this program to even the smallest of small businesses,” Treasury Secretary Steve Mnuchin and SBA Administrator Jovita Carranza said in a joint statement issued Friday.
Mnuchin and Carranza, say that to the faces of millions of desperate actual for-real small business owners who have been left penniless by a system that funneled millions into corporate pockets that are now also lobbying Congress to loosen the rules for them so they don’t have to rehire employees.
Unemployment Benefits Are Just As Difficult To Get
Many laid off employees, contractors, and sole-proprietors have voiced frustration on social media about applying for and receiving unemployment benefits to get them through this tough economic time.
A Twitter user identifying herself as Darcel Moreno tweeted to Governor Abbott, “I’ve called 102 times to Texas Workforce Commission. Still no answer or resolution. This is everyday. Americans aren’t being helped with unemployment benefits.“
Unemployment benefits in Texas were expanded to include those not normally eligible to receive benefits under the Pandemic Unemployment Assistance program.
The Texas Workforce Commission’s website has been bogged down with applications since the agency first began accepting applications. Phone lines are jammed with calls to TWC by applicants. Many applicants have stated that even after the commission added more to their workforce and extended their call center hours, they still have not been able to get through to the agency nor have they received their benefits.
To add insult to injury, some sole-proprietors and independent contractors have said they were told they must first apply for and then wait to be denied for regular benefits, only to then have to apply for Pandemic Unemployment Assistance at the same agency (TWC). It appears as though TWC has updated their website clarifying that the agency will determine eligibility based on information provided in applications, but applicants must still wait for long periods to be approved for benefits.
Eligible applicants are set to receive an additional $600 per week through the month of July in addition to regular unemployment benefits (if any). That’s much-needed funds that needs to be in the hands of needy families two weeks ago.
Governor Abbott in Friday’s press conference said, “More than 22 million Americans have filed for unemployment. More than a million Texans had filed unemployment claims…My recollection is there’s been well over a million Texans who have been able to be successfully processed for unemployment benefits and something like a half a billion dollars has been paid out.“
But many Texans are wondering where that money actually is since they applied weeks ago and still haven’t received benefits.
What Options Do Small Businesses Have For Loans And Funding Now?
Now that government funds have been depleted, America’s real small businesses are searching for other financial sources to get them through these tough economic times. Hard decisions will have to be made, and the inevitable reality is that some will have to close permanently or file for bankruptcy.
Business owners should consult with a professional before deciding what to do, but they do have a few options:
- Federal government may or may not replenish funds to the PPP and EIDL
- Many community-banks were able to fund small businesses when big banks like Wells Fargo, Bank of America, and Chase were not helpful and funded large companies instead. Move to a community bank, but first ask if they were able to fund small businesses.
- Some communities are setting up micro loans to small businesses. Fort Worth, Texas announced a $2 million microloan fund to help with debts and payroll. Check with your city, county or community and see what, if any, funding opportunities are available. HERE IS A LIST OF ALL TEXAS CITIES OFFERING PEOPLE FUND MICROLOAN
- Finally, if you know of other resources, let us know by sending us an email at [email protected]
DALLAS PEOPLE FUND – WHERE TO APPLY SMALL BUSINESS MICROLOAN
FORT WORTH PEOPLE FUND – WHERE TO APPLY SMALL BUSINESS MICROLOAN
Big Companies Got Loans Meant For Actual Small Businesses And It’s A Slap In The Face
Now that government funds have been depleted, America’s real small businesses feel defeated knowing big corporations got taxpayer-backed forgivable loans and they did not. Hard decisions will have to be made.
Here’s More On Metroplex Social:
- UPDATED: These Are The Publicly Traded Companies That Got The BIGGEST PPP Loans
- Mark Cuban, Jerry Jones Drafted By White House To Be On Reopen America’s Dream Team
- Waze Now Lets You Find 30,000 Emergency Food Pantries Near You
- 135 Emergency Foods You Can Get From The Grocery Store
- Dallas County Is Now Requiring Everyone To Cover Their Face In Public
- Texas Is Reopening Their Economy: Here’s What We Know So Far
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