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American burger chain Shake Shack has decided to give back the emergency loan granted by the US government after learning that the fund had run out, and many small businesses had not received any aid.
Shake Shack was given a $10 million loan under the Paycheck Protection Program (PPP), which is meant to keep small businesses afloat and help them pay their employees during the COVID-19 crisis. However, the company decided to return the loan and find other ways to raise money for its business. In a LinkedIn post, the chain said that it had found a way to get additional capital. Shake Shack is aiming to raise around $75 million by selling some of its shares to investors.
Considering the economic consequences brought by the pandemic, Shake Shack initially applied for the emergency loan to sustain its workforce and business operations.
The PPP was supposed to help small businesses that have fewer than 500 employees. However, despite being a large company, Shake Shack was able to apply because of a loophole in the application guidelines. The loophole allowed companies to count their employees per location instead of their overall workforce.
However, Shake Shack decided to return the loan after learning that the $349-billion program had run out of funds for small businesses in need of help. The restaurant hopes that the money returned is given to those who need it, and that other companies that have enough capital would follow their example.
Treasury Secretary Steven Mnuchin [mə-NOO-shin] praised Shake Shack’s move, saying that he was glad the restaurant returned the money. Now, Shake Shack CEO Randy Garutti and chairman Danny Meyer are lobbying to increase PPP funding. The US government assured that a plan to accomplish this is now in the works.