Shake Shack Returns Its $10 Million Paycheck Protection Program Loan
Updated: Apr 21, 2020
The U.S. Small Business Association (“SBA”) created the $349 billion emergency Paycheck Protection Program (“PPP”), as described under the Coronavirus Aid, Relief, and Economic Security (“CARES") Act, to provide economic relief to small business impacted by COVID-19. The programs intention is to incentivize small businesses with fewer than 500 employees to keep their workers on payroll. However, it appears that some large publicly traded corporations have become eligible for the loan by not employing over 500 employees at a single location.
Shake Shack is the largest publicly traded company to receive a loan under the program with a market capitalization of $1.6 billion and well over 7,000 employees. They became eligible for the program because they do not employ over 500 people at a single location. The $10 million loan that they received through the program was the maximum amount allotted. Shake Shack promises to return the loan, due to having $112 million of cash on hand and recently selling another $150 million worth of stock.
As Congress and the Trump Administration work to replenish the funding for another round of PPP loans, it will be interesting to see if there will be stricter stipulations on who will be eligible. If the true intention of the program is to supply small business with economic relief, then a more stringent application process is necessary.
Budletter will continue to monitor the situation as it further develops.
Raffi Garnighian is a published author and Colorado and New York licensed attorney at Wysocki Law Group, P.C. Mitchell Steeves is a law student at the University of Colorado School of Law and assisted in the publication of this article.
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