Shake Shack to Pay Back $ 10 Million Small Business Loan
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Shake Shack has announced that it will repay the $ 10 million it received as a small business loan from the federal government last week after it was able to secure additional capital.
Company CEO Randy Garutti and founder Danny Meyer, who is also CEO of Union Square Hospitality Group, confirmed the return. in an open letter posted on LinkedIn This weekend. The couple explained the company’s reasoning for applying for a Paycheck Protection Program (PPP) loan under the Coronavirus Aid, Relief and Economic Security Act, and called the “extremely confusing” loan process.
“It was up to each company to determine how, when or even if to apply “, we read in the letter:
The “PPP” came without a user manual and it was extremely confusing. The two Shake Shack (a company with 189 restaurants in the United States, employing nearly 8,000 team members) and Union Square Hospitality Group (with over 2,000 employees) came to a similar conclusion. The best chance to keep our teams on the job, off the unemployment line and rehire our vacationed and laid-off employees, would be to apply now and hope that things would be cleared up in time.
Shake Shack was criticized by many last week to apply for and receive a loan when many smaller chains and operations were unable to apply for or receive loans before PPP funding ran out. The loans were designed to ease some of the financial pressures small businesses (like restaurants) face amid the COVID-19 outbreak.
“If this law was written for small businesses, how is it possible that so many independent restaurants whose employees needed so much help couldn’t get funding? the questioned letter. “We now know that the first phase of the PPP was underfunded, and many of those who need it most received no help.”
In the letter, Danny and Randy stated that Shake Shack immediately repaid the entire $ 10 million loan after receiving additional capital “through a public market equity transaction.” In addition to this news, the letter outlined suggestions for improving the process for receiving PPP loans, including increased funding. They did not respond directly to criticism received by the company, but urged Congress to implement some adjustments so that restaurants and other small businesses were not pitted against each other.
“If this health crisis and the associated economic shock have taught us anything, it is that we are all in the same boat”, they wrote: “Restaurants and their employees are thirsty for the moment when we can resume our activities. safely and bring our guests. back to the table. ”
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