In March, Congress passed a small-business bailout known as the Paycheck Protection Program, or PPP. The noble goal of the $350 billion program was to lend just about every endangered small and medium-size company enough money to cover two months of payroll and operations. Even better, that loan would be forgiven if those companies didn’t lay off their workers.
But within two weeks, the PPP funds ran dry. In the hunger-games scrum for loan money, large companies—with their finance teams, legal departments, and preexisting relationships with banks—emerged with the biggest hauls.
Most infamously, restaurant chains such as Ruth’s Chris Steak House, Potbelly Sandwich Shop, and Shake Shack took millions of dollars in loans. These are not “small” businesses by any reasonable definition. Shake Shack is a publicly traded company with 8,000 employees and annual revenue of nearly $600 million. Ruth’s Hospitality Group has 59 locations and $87 million in cash on hand.
The widespread condemnation of these loans is righteous, understandable, and completely misplaced. First, these companies legally qualify for the PPP given the state of their industry—the utterly obliterated restaurant sector—and the franchise-based nature of their businesses. Second, they employ a lot of people. One cannot simultaneously mourn the loss of millions of jobs while tsk-tsking companies that use every means available to stave off a bankruptcy that will end with mass layoffs.