“Slap in the face”: Small businesses got no PPP loans while chains like Shake Shack got millions
(CBS NEWS) – With Federal Paycheck Protection Program short of money, some small business owners express their anger at large businesses, such as Ruth’s Chris Steakhouse chain – received tens of millions of dollars in aid.
Take Ruhel Islam, owner of Ghandi Mahal, a Bangladeshi and Indian restaurant in Minneapolis, Minnesota. He applied for a six-figure Small Business Administration loan of $ 349 billion and got nothing.
“I think the big restaurants had better systems to handle this, as we worked hard to keep our doors open. They have people to navigate for them, when we had to do it ourselves, and I think that’s why they were ahead of us in terms of loan applications, ”Islam told CBS MoneyWatch.
Its staff of 22 is now down to seven, now focusing mainly on take out orders. Islam was looking for a loan of about $ 100,000 – the equivalent of 2.5 times its average monthly payroll – in order to pay the wages of these workers.
Islam, from Bangladesh, believes her application was denied in part because her restaurant entered the Paycheck loan queue relatively late. He applied for a loan on April 16, nearly two weeks after many banks started accepting applications. The language barrier also made him back down.
“I understand the language of spices, and if you tell me to make something really spicy, I can. But to understand loans and everything, we need a lawyer, an accountant, a banker. My banker is wonderful, but by the time I realized we had this option it was too late, ”he said.
Islam is also frustrated that he has spent time and resources submitting a request without any profit. “It took a lot of paperwork, and I had to involve my accountant and other people to send 11 attachments, and after all of that, I found the money was gone.”
Other small business owners are furious that much larger businesses are using the paycheck protection program. Adriana Carrig, owner of Caldwell, the New Jersey jewelry company Little Words Project, applied for a $ 140,000 payday loan through JPMorgan Chase on April 4 – the day the request was first made available to her. .
She was relying on the funds to keep her nine full-time employees employed. The coronavirus has wiped out all of its wholesale jewelry orders which normally represent 60% of its business. “I applied the second the program opened and downloaded my documents when asked to do so,” Carrig said.
“It was infuriating to see that places like Ruth’s Chris and Potbelly received millions of dollars that should have gone to real small business owners,” she added.
Perhaps calming such anger, Shake Shack announced on Sunday night that it was pay off the $ 10 million loan it was awarded through the Paycheck Program. But it seems too little too late for some entrepreneurs.
“It sounds very dirty and that’s not what real small businesses, helping each other, don’t put our hands in the pot when they don’t belong there,” Carrig said of the more. large restaurant chains that qualified for loans, aimed at businesses with fewer than 500 employees. “For them, getting funds is like a slap in the face. “
Paycheck lending rules allow large companies to apply for every restaurant they operate, as long as each location has fewer than 500 employees and is a separate legal business entity.
Carrig didn’t fire any of her employees, but said she couldn’t run her business without help: “I broke the loan application to the last penny – it all would have gone to payroll to keep my employees. Now, I don’t know how we’re going to survive when everyone is working from home and getting paid in full. ”
Colin McIntosh, founder of Denver, Colorado bedding company Sheets & Giggles, is also angry that he applied for the loan program quickly, but it came back empty.
“I’m frustrated with the time and the work I did to make sure we were ready to go. I even paid my [chief financial officer] to help us with that, ”he said. “Spending precious time and money on the app and getting nothing is really a punch in the stomach. “
Jonathan Butler, co-founder of Smorgasburg & Brooklyn Flea, was also denied a loan despite preparing his documents and uploading it about an hour after Chase’s site went live on April 3. After changing his request, Chase submitted it to the SBA on April 7, Butler told CBS MoneyWatch.
Although he is disappointed that he did not get a loan, he said he did not resent big companies asking for the same funds. “The fault really lies in the way Congress drafted the bill,” said Butler.
The loan would not have solved his biggest business need anyway, he said.
“It makes sense for companies whose operations have slowed down and needed a bridge to semi-normality, but the focus on payroll doesn’t make the most sense to me as a company that has closed completely, ”said Butler. “I’m more concerned with paying my rent and having enough cash on hand to reopen if and when possible.”