Shake Shack went viral on Twitter with the announcement that it would be returning their $10-million emergency small business loan as the company has “access to capital that others do not.”
Shake Shack gave back a $10M emergency small business loan it got from the U.S. government.The $350B fund ran out of money last week. It's meant for small businesses, but 25% went to just a few companies, including chains and hotels with 1,000+ employees. pic.twitter.com/RsdF0u65GI
— AJ+ (@ajplus) April 20, 2020
This comes in the wake of the news that the PPP (Paycheck Protection Program) has run out of funds already, and that a significant proportion of them have gone to chain restaurants and other establishments that most would not categorize as small businesses.
Real questions:Which bank approved Shake Shack's $10m PPP loan?Which bank approved Potbelly's $10m PPP loan?Which bank approved Ruth Chris' $20m PPP loan?The loan process was suppose to be first come, first serve. How did they get first in line?
— Michael Skolnik (@MichaelSkolnik) April 20, 2020
This is a weird response from the U.S. Treasury Secretary. He's basically saying the money should not have gone to companies like Shake Shack, but his team wrote the rules that allowed that to happen. https://t.co/ZeQVAwPSOT
— Andrew Brown (@Andy_Ed_Brown) April 20, 2020
Shake Shack has also released an open letter explaining its reasoning for returning the loan and providing advice to the government on how to better handle the PPP system to ensure the money gets to the actual small businesses who need it.
$10M to Shake Shack? $20M to Ruth’s Chris? Really? Stacey and I own a small business with 14 employees, we are active in the business community, and we cannot name one single business owner who received aid as part of this package.
— Brian Caskey (@BrianCaskeyNC) April 19, 2020
I couldn't get a loan but they did… #PPPFail 20 million – Ruth Chris (Chase)15.1 million – J Alexander’s (Pinnacle Bank)10 million – Shake Shack (Chase)10 million – Potbelly (Chase)10 million – Taco Cabana (Chase) 10 million – Hallador Energy Company (PNC)
— Corey Ann (@coreyann) April 18, 2020
Of course the big corporation chains like shake Shack got millions when I can’t get $20,000 to feed my employees.
— Sam Zee (@SamZComedy) April 20, 2020
Apparently, when Shake Shack applied for the loan, the company didn’t realize the funds were so limited and assumed there would be enough to go around. Keeping its locations open for delivery and socially-distant pickups during the pandemic was costing them $1.5-million a week, and because they did in fact meet the fewer than 500 employees per location criteria set by the Small Business Administration, Shake Shack decided to apply for the loan to ease them through the pandemic.
Thank you @shakeshack – but this begs the question: why the heck did Shake Shack get this, when so many small businesses are being told there is no more money?! If everyone in the country knows your company name, you’re not a small business. https://t.co/cT2MIoZ5bI
— wowmu (@mistermu0) April 20, 2020
I mean, good on Shake Shack. But no *wonder* the program ran out of money if a multinational franchise is what they decided to call a small business. https://t.co/ZsAW6nYAZA
— N. K. Jemisin (@nkjemisin) April 20, 2020
SBA ran out of money last week and can no longer offer small businesses the PPP. Today, Shake shack a big corporate company casually said “here have our 10 million back” WHY DID CHASE ALLOW A LARGE CORP TO APPLY FOR A LOAN MEANT FOR SMALL BUSINESSES IN THE FIRST PLACE.
— Kimberly (@badgalllkim) April 20, 2020
The discovery that the PPP fund had already run dry, and much of it spent bailing out similarly sized or larger businesses, coupled with the company’s ability to raise money via investors instead, led to Shake Shack returning the money.
— Tara Deiana (@Tara_Deiana) April 20, 2020
In its open letter, the company criticized the confusing nature of the application system, something they say kept many small restaurants from being able to apply in the first place. They also pointed out that almost no restaurants have more than 500 employees per location, and smaller businesses with less ability to access other sources of capital should be prioritized when handing out similar loans in the future.
Shake Shack got 10 million dollars and laid off 1000 workers which is weird because I thought these loans were for companies with under 550 people. https://t.co/kKKMGtSHxq
— Minders McGee(@) (@mindela_) April 19, 2020
Some are calling this a PR stunt, designed to try and fix the damage taking the $10-million loan has done to the chain’s reputation.
Shake Shack returning entire $10 million PPP loanThey got caught and called out.This wasn't done out of kindness, it was done out of shame.https://t.co/jIw0mRICEw
— Red T Raccoon (@RedTRaccoon) April 20, 2020
A nice little loophole that Shake Shack exploited with "45 employees per location" until they felt the & decided they needed to "return it".
— SugarAintSweet (@Blippityblap111) April 20, 2020
Screw shake shack. Never going back there. Stealing from real small businesses.
— AmericaIsInDenial (@RealClassicWoW) April 20, 2020
This was really the right thing to do. As a small business owner I was appalled to hear that big chains with such great capital were getting the PPP loan. I'm so glad I can still support you guys and look forward to eating at Shake Shack soon!
— Kim Fox (@kimfoxphoto) April 20, 2020
While others see it as an example of good corporate citizenship, and are calling on the other chains who took the loan to return the money.
Harvard has an endowment worth $40 *billion* and took $9 million after firing dining room employees.Shake Shack is going to *give back* their $10 million in emergency loans so that smaller businesses can get help.What a contrast. https://t.co/8hakk9MvuN
— Josh Jordan (@NumbersMuncher) April 20, 2020
Ruth Chris Steakhouse made a 42 million dollar profit last year yet they took $20 million in loans.They could do the right thing like SHAKE SHACK… GIVE IT BACK. Save hundreds of small businesses…#AmericanGreed pic.twitter.com/q6kyhr13zu
— J T Fisher (@JTFisherAuthor) April 20, 2020
Shake Shack just returned their $20MM. So how about you @RuthsChris?
— AmericaAdrift (@larry_author) April 20, 2020
Boycott @RuthsChris and @soulcycle for their millionaire owners taking money intended to help small business. Applaud Shake Shack for returning theirs and , frequent their restaurants. Not with the bad publicityRuth’s Chris or Soul Cycle or his other gyms. https://t.co/4RyI3gl3wp
— leslie (@lesliesusan27) April 20, 2020
The post Shake Shack returns stimulus loan—with mixed reactions appeared first on The Daily Dot.
Read more: dailydot.com