The $2 trillion coronavirus aid package passed by Congress March 26 included $350 billion in the Small Business Administration’s Paycheck Protection Program, and already those funds ran out on April 16. The Nevada Independent estimates that 8,674 Nevada businesses received $2.01 billion of the $350 billion available.
The program came under fire from local restaurant owners when companies such as steakhouse Ruth’s Chris Steak House with a location at Harrah’s Las Vegas, Shake Shack with six local locations, and Potbelly Sandwich Shop, which plans to open 10 locations in the Las Vegas area, received a combined $40 million in loans from the program.
“I’m just over here waiting for our bank to process our forms,” Valencian Gold co-owner Jeff Weiss wrote on Facebook as news that Ruth’s Chris received a $20 million loan on April 7 as the CARES Act programs, the largest economic stimulus package in U.S. history, opened up for applications.
The payroll protection fund provides loans of up to $10 million per business with 500 employees or fewer, and any portion of that loan used to maintain payroll or pay for rent, a mortgage, and existing debt could be forgiven as long as workers stay employed through the end of June. A loophole in the law made it so that businesses with fewer than 500 employees per location could apply.
Shake Shack CEO Danny Meyer decided to return the $10 million small business loan it received from the government. Meyer, who founded the chain, made the announcement in a letter posted on LinkedIn on Sunday, writing that Shake Shack was returning the loan “so that those restaurants who need it most can get it now.”
Meyer co-wrote the letter with Shake Shack CEO Randy Garutti, listing the company’s reasons for applying for the loan, namely that it seemed like the best way to keep people currently working on the payroll and and potentially hiring back his 2,000 furloughed staff members nationwide. They called the application guidelines “extremely confusing,” and noted that the program was open to restaurants that didn’t have more than 500 workers in one location.
Meyer estimates that Shake Shack was losing $1.5. million each week after the virus hit the United States, and applying for the loan was intended to help keep the business open to pay staffers, the letter says.
While the federal loan program ran out of money on April 16, Congress is nearing a deal to add $300 billion to the payroll protection program, with a vote expected in the Senate on Monday and House of Representatives on Tuesday. It’s unclear whether large chains will once again be the beneficiaries of the loans.
In Nevada, Rep. Dina Titus and Sen. Jacky Rosen introduced legislation on Friday that permits legal gaming small businesses that earn less than $1 million annually from gaming revenue to access the program, as well as other coronavirus relief programs created by the CARES Act. Previously, all companies that earned revenue from gaming were excluded from federal funds.
Nevada with its population of 3.08 million came in last in the number of loans approved and the amounts of those loans when compared to six states with comparable populations of 2.9 million to 3.5 million. Nationwide, the SBA approved 1.6 million loans totaling more than $342 billion by April 16. The average loan size was $206,000.
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