The U.S. Congress recently approved an additional 310 billion dollars for its “Paycheck Protection Program” or “PPP”. It’s meant to offer relief for small businesses amid the COVID-19 outbreak.
The first round of small business stimulus in the amount of 349 billion dollars – ran out of money in less than two weeks.
“I personally don’t know any small business owners who have received funding from PPP in DC,” said
Eric Wang, the co-owner of Thamee restaurant in Washington D.C.
Much of the money reportedly ended up going to large firms including hedge funds and publicly traded companies.
They included the owner of Ruth’s Chris Steakhouse traded on the NASDAQ. It got 20 million dollars.
Potbelly – a chain of sandwich shops and burger giant Shake Shack – each got 10 million dollars as did salad chain Sweetgreen.
Part of the problem is the money was doled out on a first-come first-serve basis not based on need.
‘A company that’s doing tens of millions of hundreds of millions a year in revenue is going to be first in line with a big bank when it comes time to apply for one of these things. And if you’re a little guy, chances are you’re going to the back of the line,” said Zachary Davis, the co-owner of The Penny Ice Creamery in Santa Cruz, California.
Four banks – including JP Morgan Chase and Wells Fargo – are being sued by small businesses for allegedly prioritizing applications from big companies because they generate higher fees.
“That’s what they do. They loan money. And they’re supposed to do it according to – not only criteria – but according to what we think is right. But if somebody got something that we think is inappropriate, we’ll get it back,” said U.S. President, Donald Trump.
The Small Businesses Administration recently issued an advisory saying if a company cannot prove it was truly eligible for a loan, the money should be returned by May 7th.
After considerable criticism, Shake Shack, the owner of Ruth’s Chris Steakhouse, Potbelly and Sweetgreen all announced they will return a total of 50 million dollars in loans they got from the government. The Treasury Department also said hedge funds and private equity funds do not qualify for the loans.