April 23, 2020 § Leave a comment
While big restaurant chains and other firms whose stock is traded on Wall Street gobbled up large portions of the “small business” relief money, and the major Wall Street banks pocketed $10 billion in loan fees, family-owned restaurants, barber shops, beauty salons, retail stores and other small firms were pushed to the back of the line or denied relief outright.
The program ran out of funds last Thursday, less than two weeks after it was launched, leaving hundreds of thousands of small businesses high and dry and their millions of laid-off employees facing destitution. Now the Trump administration and Congress are rushing to inject an additional $310 billion into the PPP.
On Wednesday, the Senate passed by unanimous consent a new $484 billion bailout bill, whose central component is the renewal of the PPP. At the urging of the Democrats, looking to provide a “progressive” fig leaf to the pro-corporate measure, and with the agreement of Trump, the bill tacked on a totally inadequate $75 billion for hospitals and a derisory $25 billion for COVID-19 testing.
Speaker of the House Nancy Pelosi has announced that the Democratic-controlled chamber will vote on the new bill on Thursday. On Tuesday, she hailed the passage of the bill in the Senate, declaring that the Republicans “have seen the light—and we had a great victory for the American people.”
Among the businesses that have received low-interest PPP loans, which are to be forgiven if the firms use 75 percent of the money to keep their workers employed for eight weeks, are:
- The Ruth’s Chris steakhouse chain, with some 5,000 employees at over 100 locations in 2019 and $468 million in revenues. It received two PPP loans totaling $20 million. The total compensation for CEO Cheryl J. Henry was $6,105,629 in 2018. The stock price of the chain’s parent company, Ruth’s Hospitality Group, has risen by 112 percent over the past month.
- The Potbelly Sandwich Shop chain, with around 6,000 employees at 474 locations in 2019 and revenues of $410 million. The company received a PPP loan for $10 million. Total compensation for CEO Alan Johnson in 2018 was $1,668,251. Potbelly stock has risen 70 percent over the past month.
- The Shake Shack restaurant chain, with some 6,000 workers at 254 locations in the US and internationally and $595 million in revenues in 2019. It received $10 million in PPP loans. Total compensation for CEO Randy Garutti in 2018 was $3,805,410. Shake Shack stock has risen 40 percent over the past month. On Sunday, Shake Shack announced it was returning its PPP loan.
- The J. Alexander’s restaurant chain, with 2,700 employees at 46 locations in 2019 and $304 million in revenues in 2016, received $15.1 million in PPP loans. Total compensation for CEO Mark Parkey was $591,000 in 2019. J. Alexander’s stock has risen by 2 percent over the past month.
Other large firms that received PPP loans include:
- The Ohio-based biotech company Athersys, which raised almost $60 million in a stock offering on Monday. Its shares have nearly doubled in 2020.
- Indiana-based coal operator Hallador Energy, which received $10 million after it laid off 60 workers in March.
- Data storage company Quantum took $10 million.
- Nicola Motor, backed by giant hedge funds and asset management firms and valued at $4 billion, received a loan of $4 million.