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Ruth’s Hospitality Group, the owners of Ruth’s Chris Steak House, announced on Thursday that they would be returning $20 million in small-business loans obtained through the Small Business Association’s Payment Protection Program (PPP).
The announcement comes after the Treasury Department clarified that large companies with “substantial market value” would be unlikely to demonstrate, in good faith, that they would be in need of such small-business loans.
Hundreds of thousands had also signed a Change.org petition earlier this week, urging Ruth’s to repay the loans, lest the group be “shamed forever.”
On Thursday, Ruth’s Hospitality Group announced its intentions to “accelerate [the] repayment” of the loan.
"We intended to repay this loan in adherence with government guidelines,” Ruth’s wrote in a statement. “As we learned more about the funding limitations of the program and the unintended impact, we have decided to accelerate that repayment. We remain dedicated to protecting our hardworking team. It is our hope that these funds are loaned to another company to protect their employees, just as we intended."
The Small Business Administration’s loan program was designed to help small businesses stay afloat and keep workers employed amid the ongoing coronavirus health crisis. But after the initial $349 billion in funding was depleted last week, those that applied for relief — and were rejected — turned attention to the bigger chains and publicly traded companies that somehow received loans from the SBA instead.
Ruth’s Hospitality Group was just one of those companies, receiving a total of $20 million in forgivable loans — $10 million apiece for two of its subsidiaries — which is earmarked “primarily for payroll costs,” according to an SEC filing from Ruth’s.
“We're seeing that these larger corporations, as you see someone like Ruth’s Chris Steakhouse, just got $20 million,” Nancy Calamusa, the owner of a small medical treatment facility in New Jersey, told Fox News last week. “You know, and here we are trying to survive and provide medically necessary intervention to a population that is at risk and vulnerable. And yet, you know, kayak rental businesses are getting $10 million. The process should have been a better hierarchy on who received these funds first.”
Ruth’s Chris wasn’t the only restaurant chain targeted by critics. Potbelly Sandwich Shops received $10 million, and burger chain Shake Shack actually announced its intentions to return a $10 million SBA loan on Monday after acquiring “additional capital” elsewhere. However, Shake Shack CEO Randy Garutti and founder Danny Meyer, who is also the CEO of the Union Square Hospitality Group which includes Shake Shack, said they were unaware of how the SBA would be distributing money when applying for the loan.
“There was no fine print, anywhere, that suggested: ‘Apply now, or we will run out of money by the time you finally get in line,’” Garutti and Meyer wrote in an open letter posted to LinkedIn.
When Congress created the $349 billion PPP program, loans were intended only for businesses with fewer than 500 employees, but restaurants and other hospitality groups would also be able to apply if no more than 500 workers were employed at any single location. The loans are also eligible for forgiveness if 75 percent of the money goes toward keeping workers employed and maintaining salary levels, among other criteria.
On Tuesday, the Senate voted to pass another stimulus package which would provide more than $300 billion to further fund the PPP. The same day, Treasury Secretary Steven Mnuchin told reporters at a press conference that the loans were not intended for companies that have “access to liquidity and other sources.” He added that there would be “potentially other consequences” for companies who fit that description but fail to repay the loans.
On Thursday, the Treasury Department issued guidance for the intent and eligibility of the Paycheck Protection Program’s loans, writing that any borrower who did not meet the certification for a PPP loan, but applied and received one, would have until May 7 to repay, lest it be deemed that they had not “made the required certification in good faith.”
Fox News’ Perry Chiaramonte and Gregg Re, as well as Fox Business’ Megan Henney, contributed to this report.