Companies That Are Absolutely Not Small Businesses Are Getting Millions Of Dollars In Small Business Loans

https://www.buzzfeednews.com/article/davidmack/coronavirus-small-business-loans-big-companies-potbelly

David Mack
Last updated on April 17, 2020, at 4:46 p.m. ET
Posted on April 17, 2020, at 4:13 p.m. ET

A federal crisis fund of $350 billion established to keep small businesses afloat during the coronavirus pandemic ran out this week, leaving thousands of companies waiting desperately for help.

But several giant companies with hundreds of stores, thousands of employees, and whose executives make millions announced they'd received the maximum possible payouts under the small business program.

"Unfortunately, they were in line as soon as the window opened for this program and took a lot of resources away from those small business owners where this was their only option," Holly Wade, director of research with the National Federation of Independent Business (NFIB) lobby group, told BuzzFeed News.

Sandwich maker Potbelly and Ruth's Chris Steak House successfully obtained loans worth $10 million and $20 million, respectively, according to filings this week with the Securities and Exchange Commission. The Taco Cabana chain, which has at least 164 stores across the country owned by a parent company, also received a $10 million loan.

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The act provided up to $350 billion in loans to businesses with 500 employees or less for payroll purposes.

But the law provided some flexibility to restaurant and hotel groups by stating they could apply as long as they had no more than 500 workers at a single location.

Under the Paycheck Protection Program (PPP), the government will forgive the loans if the money is used on payroll, rent, or utilities — and workers aren't laid off.

Potbelly, Ruth's, and Taco Cabana are publicly traded companies so their SEC filings were made public, but private companies do not have to disclose any loans.

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In the very same SEC filing that revealed its PPP loan, Potbelly announced it had promoted Steven W. Cirulis to the roles of chief financial officer and chief strategy officer, paying him a $425,000 yearly salary, which has been temporarily reduced by 25% due to the pandemic. Just for signing on, Cirulis was awarded a $100,000 bonus and will be eligible for a year-end bonus worth up to 60% of his base salary.

In 2018, Potbelly CEO Alan Johnson received more than $1.6 million in salary and bonuses. The company owns more than 400 stores in the US.

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News of the company's small business loans came as the small business fund ran out of money on Thursday, hitting its $350 billion limit after making more than a million loans.

Negotiations to extend it have stalled in Congress, but advocacy groups say more needs to be done to protect actual small businesses.

Wade, the NFIB research director, said the behavior of the large companies was "going against the spirit of the law."

"They have lines of credit and other available loans and they can work with their bank," she said.

The average NFIB business, Wade said, has just five employees. "This was one of the very few options where they could go for financial assistance," she said.

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