Shake Shack stated it would return the small business loan it received from the U.S. authorities, making it the first primary agency to hand back cash provided to assist businesses journey out the impact of the coronavirus lockdown.
The corporate will immediately return the entire $10 million U.S. Small Business Administration (SBA) loan because it was able to raise additional capital, chief Randy Garutti and founder Danny Meyer stated in a blog post on Monday.
Shares of Shake Shack, which raised nearly $150 million in an equity offering last week, plunged about 3% to $42 Monday morning.
SBA, which is a crucial part of the government’s $2.2 trillion aid package, is geared toward serving small corporations to keep paying their staff and their necessary payments during the shutdowns so that they can reopen shortly when public health allows.
Over 25% of the total $350 billion fund went to fewer than 2% of the companies that got relief, including various publicly traded companies with thousands of staff and millions of dollars in annual sales.
This led to criticism from smaller establishments and mom-and-pop restaurants, one of the hardest-struck industries as diners stay at home due to lockdowns.
Ruth Hospitality Group, Potbelly Corp and Fiesta Restaurant’s Texas Taco Cabana are among the networks which have borrowed money.