Ruth’s Chris Steakhouse
Source: Ruth’s Chris Steakhouse
Ruth’s Chris Steakhouse owner, Ruth’s Hospitality Group, announced Thursday that it is repaying the $20 million it received under the federal government’s Paycheck Protection Program.
“We intended to repay this loan in adherence with government guidelines, but as we learned more about the funding limitations of the program and the unintended impact, we have decided to accelerate that repayment,” the President and CEO Cheryl J. Henry said in a statement.
A person familiar with the matter said the loan was received two weeks ago, but had not yet been used due to payroll schedules. As for future funds or access to liquidity, the source told CNBC that Ruth’s will “carefully weigh all options available to them.”
By applying through two subsidiaries, the company was granted a total of $20 million in loans in early April, according to an SEC filing.
The PPP was created to aid struggling small businesses cover payroll and expenses as the coronavirus pandemic disrupts normal operations. The program has given out nearly $600 million in loans to about 150 public companies. However, the $349 billion program ran out of money last week, prompting Congress to inject an additional $310 billion into the fund.
While the program had a $10 million loan limit, big hotel and restaurant businesses were able to apply through multiple subsidiaries if each location had less than 500 employees. Consequently, many small business owners were unable to receive any financial assistance before the initial funding ran out. This sparked backlash against big companies like Shake Shack and Potbelly, who received maximum funding.
In response to a surge of complaints, Shake Shack announced last week that it would return its $10 million loan. “We’ve ensured our long-term stability, now it’s time for us to help our friends in the industry do the same,” CEO Randy Garutti said on CNBC’s “Squawk on the Street” on Monday.
Although some restaurant groups are repaying their loans, they are not immediately reallocated to small businesses. A senior administration official told CNBC that when companies return these loans, they are added back into the PPP fund but loans can’t be made against the funds until Congress allocates more capital to PPP.