Following up my last blog post about public companies announcing they would not be returning funds meant for small businesses is an article from NPR which discusses how Shake Shack is returning a $10 million federal loan after the Paycheck Protection Program (PPP) that was meant to help small businesses ran out of money in less than two weeks of operation.
The company will “immediately return the entire $10 million PPP loan we received last week to the Small Business Association (SBA) so that those restaurants who need it most can get it now,” their CEO said. Shake Shack employs about 8,000 people at its restaurants across the United States, but only around 45 people in each location. While their revenue to date marks a decline from 2019, the company has $104 million in cash and assets, says it has secured other loans to cover the money that would have come from the SBA.
Shake Shack’s CEO criticized the PPP system for being confusing by limiting the funds and setting the program to run through June 30 – “it’s inexcusable to leave restaurants out because no one told them to get in line by the time the funding dried up”. 74% of the PPP were for less than $150,000, according to the SBA- but that represents only 17% of the total money disbursed through the program. Nearly 28% of the money was awarded to companies seeking loans of $2 million or more. 9% of all approved PPP funds were granted to the food service and accommodation industry, roughly $30.5 billion.
I wanted to write this article because Shake Shack clearly did the right thing by returning the funds, but the PPP system that has been set up is indeed confusing and something needs to be changed. Yes, I think Shake Shack made the right, and ethical choice, but I don’t commend them for it simply because it would have been the wrong thing to do had they kept the funds. As the article stated Shake Shack has $104 million in capital, and as their CEO essentially said, they can afford to pay for some things out of pocket rather than take $10 million away from the majority small businesses that really need them (the 74% that were granted for less than $150,000).
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