The Paycheck Protection Program ‘contributed significantly’ to job growth in the U.S. in May, June and July, says Small Business Administration Manager Jovita Carranza tells FBN’s Edward Lawrence.
Potbelly has obtained another $ 10 million loan through the taxpayer-funded Paycheck Protection Program – but this time, the Chicago-based sandwich chain aims to keep the money.
The company, which repaid a $ 10 million loan it received in a public outcry in April, revealed in a regulation filed last week that it had obtained a $ 10 million loan through the small business rescue program, a fund of $ 670 billion that was made in March when Congress passed the CARES Act.
The loan was approved August 7, the Securities and Exchange Commission submits shows, a day before the PPP was closed to new applicants with roughly $ 138 billion left in the fund.
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“While we qualified for a loan in the first round of the Payroll Protection Program, we came back when it looked like many other companies would remain without assistance,” Potbelly said in a statement to FOX Business. “In the next round, the program was about to close with billions of dollars in available funds that were still there.”
| Ticker | Security | Last | Change | Change% |
|---|---|---|---|---|
| PBPB | POTBELLY CORPORATION | 4.70 | -0.01 | -0.21% |
The company said it remains “significantly affected” by the pandemic and remains “well below” pre-crisis levels.
The program – designed to keep small businesses on the floor and prevent mass layoffs – was open to any business with less than 500 employees per location. As long as 60 percent of the money goes to maintaining payment transactions, the federal government will forgive it, essentially converting the loan into a subsidy.
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Initially, the program drew criticism for granting multimillion-dollar loans to large, public corporations, including Potbelly, because the initial $ 349 billion that Congress evaporated from the fund within 13 days evaporated. Other chains that returned the money under public pressure include Shake Shack and Ruth’s Chris Steak House.
At least 440 public companies received forgiving loans totaling more than $ 1.39 billion through the program, according to Washington, DC-based data analytics firm FactSquared. Of those companies, 69 have the money back, or roughly $ 436 million.
The Trump administration shrugged to close the loopholes that allowed these companies to tap the fund, including pledges to check every loan worth more than $ 2 million. The government also demanded that companies obtain a “required certification in good faith” that the application for PPP loans is necessary.
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“We were surprised and disappointed when the fund was quickly depleted, and many left without help,” Potbelly said in a statement announcing it would return the funds. “We are returning the PPP loan after further clarification from the Treasury Department.”
Lawmakers finally agreed to add another $ 310 billion to the program by the end of April, but the question had already been leveled over concerns about forgiveness. Congress is lifting the restrictions of the program to give borrowers more flexible terms, including reducing the percentage of the loan that must be spent on pay to 60% from 75%.
The new five-year loan that Potbelly received is at an interest rate of 1%. The company said it intends to apply for forgiveness for a “portion of the loan.”
“To protect the jobs of our employees, and to support their families who rely on Potbelly for their livelihood, we have applied for a loan,” the company said in its statement. “The funds will go to our dedicated staff, to keeping jobs and keeping stores open.”
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