Potbelly Corp., a sandwich chain with more than 440 restaurants across the U.S., said it will return the $10 million it received through the Paycheck Protection Program, or PPP.
The Chicago-based fast-casual chain joins several other well-known restaurant brands who have announced plans to give back federal relief funds designed to help small businesses impacted by the coronavirus pandemic.
In a short statement issued Saturday, April 25, Potbelly said the company applied for the PPP loan as “sales dropped dramatically when COVID-19 hit, forcing us to furlough employees, close shops, and significantly cut salaries at all levels of the organization.”
“We were surprised and disappointed when the fund was quickly exhausted, leaving many without help,” the company said. “We are returning the PPP loan after further clarification from the Treasury Department. We will continue to seek alternatives to help support our employees and enable them to return to work so they can serve our loyal customers.”
The chain did not respond when asked how many total employees have been furloughed.
The $349 billion PPP loans were part of the $2 trillion Coronavirus Aid, Relief and Economic Security, or CARES Act.
When the initial round of PPP funds dried up earlier this month, several publicly-traded companies like Potbelly, Ruth’s Chris Hospitality and Shake Shack disclosed that their chains had received funds. They faced immediate backlash as many independent restaurants did not receive any funding.
Several have since announced plans to return the funds including Shake Shack, Sweetgreen, Ruth’s Chris Hospitality and J. Alexander’s Holdings Inc.
On Friday, President Trump signed a $484 billion relief bill that replenishes the PPP program, which is adminstered by the Small Business Administration. The agency will resume accepting applications at 10:30 a.m. Eastern on Monday, April 27, from approved lenders with some new guidelines.
The initial round of funding allowed companies to apply for PPP loans for any physical location that has fewer than 500 workers. The second round of funding discourages large companies with access to additional capital to apply.
“It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification,” the Treasury said.
In a joint statement, SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin said borrowers that have already applied will be back in contention.
“We encourage all approved lenders to process loan applications previously submitted by eligible borrowers and disburse funds expeditiously,” the statement said. “All eligible borrowers who need these funds should work with an approved lender to apply. Borrowers should carefully review PPP regulations and guidance and the certifications required to obtain a loan.”
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