Shake Shack, an American fast-casual restaurant chain based in New York City, is reportedly returning the Small Business Administration (SBA) loan it received from the United States government as a part of their US$2.2 trillion aid package to bolster the COVID-19-hit economy.
The corporation is the first major business to return the loan and is reportedly immediately doing so after it was able to raise additional capital valued at US$150 million. While they raised about $150 million in an equity offering during the previous week, Shake Shack equity prices reportedly fell by about 3% to US$42 on Monday, April 20.
A letter from founder Danny Meyer and chief executive Randy Garutti reads: “Shake Shack was fortunate last Friday to be able to access the additional capital we needed to ensure our long-term stability through an equity transaction in the public markets. We’re thankful for that and we’ve decided to immediately return the entire $10 million PPP loan we received last week to the SBA.”
In acknowledgment of the exhaustion of Paycheck Protection Program (PPP) funds, the letter added that the return of the loan meant “restaurants who need [the funding] most can get it now.”
The US$2.2 trillion aid is dedicated to keeping employees on payroll, helping individuals continue to have a source of income and enabling businesses to bounce back after the community is deemed safe enough to reopen.