Why Small Businesses Aren't Getting Financial Relief

In order to protect many small businesses in danger of filing for bankruptcy, the federal government created the Paycheck Protection Program. The program was aimed to provide emergency loans in order to pay workers. While a loan may not seem like a very fair form of financial relief, the Small Business Administration (SBA) said they would, “forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.” This way, companies that properly use the relief money won’t actually have to pay back loans, but those that do will face the penalty. At a glance, this seems like a great program.

That is, until earlier this week, where many people saw how unfair this program was. There was lots of outcry when the restaurant chain Shake Shack received a 10 million dollar loan. Shake Shack is no means a small restaurant chain, as it has 189 outlets and nearly 8,000 employees in the United States. Shake Shack was not in dire need of cash, and certainly not 10 million dollars, yet it came out with more than many small restaurants that needed it. While Shake Shack apologized and said that they would return their money to the government, many other large businesses most likely won’t.

In the relief program, it said that businesses that employ fewer than 500 people are eligible for loans. However, it also added that “businesses, including restaurant and hotel chains, with no more than 500 employees “per physical location” are also eligible”. This loophole allows many large businesses to swoop in and steal financial aid meant for smaller businesses. The government has already exhausted their 349 billion dollar fund, so the future for many small businesses is looking quite grim. With this screw up on the government's part, it seems that many small business owners are going to have to close up unless something changes quickly.


Sources:
https://www.businessinsider.com/treasury-department-public-companies-give-back-small-business-loans-report-2020-4?amp&utm_source=reddit.com
https://www.nytimes.com/2020/04/20/business/shake-shack-returning-loan-ppp-coronavirus.html
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program