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"A slap in the face": Small businesses got no PPP loans while chains like Shake Shack got millions

Emergency small business relief fund runs dry
Funding stalled in Congress as Payment Protection Program runs dry 06:35

With the federal Paycheck Protection Program out of money, some small business owners are expressing anger that bigger businesses — like pricey Ruth's Chris Steakhouse chain — received tens of millions of dollars in assistance.   

Take Ruhel Islam, owner of Ghandi Mahal, a Bangladeshi and Indian food restaurant in Minneapolis, Minnesota. He applied for a six-figure loan through the $349 billion Small Business Administration initiative and got nothing. 

"I believe bigger restaurants had better systems for dealing with this, while we were just working hard to keep our doors open. They have people to navigate this for them, while we had to do it ourselves, and I think that's why they were ahead of us in terms of applying for loans," Islam told CBS MoneyWatch. 

His 22-person staff is now down to seven employees, who now mostly focus on takeout orders. Islam was seeking a roughly $100,000 loan — the equivalent of 2.5 times his average monthly payroll — in order to pay those workers' salaries. 

Indian restaurant owner Ruhel Islam applied for a six-figure PPP loan but didn't receive funding.  Courtesy of Ruhel Islam

Islam, who is from Bangladesh, thinks his application was denied partly because his restaurant entered the Paycheck loan queue relatively late. He applied for a loan on April 16, nearly two weeks after many banks first began accepting applications. The language barrier also set him back. 

"I understand spice language, and if you tell me to make something very spicy I can. But to understand loans and things, we need a lawyer, an accountant, a banker. My banker is wonderful, but by the time I realized that this option was available to us, it was too late," he said.

Islam is also frustrated that he committed time and resources to submitting an application, with no payoff. "It required a lot of paperwork, and I had to involve my accountant and other people to send in 11 attachments, and after all that I found out the money was gone." 

Other small business owners are furious that much bigger companies tapped the Paycheck Protection Program. Adriana Carrig, owner of Caldwell, New Jersey jewelry company Little Words Project, applied for a $140,000 payroll loan through JPMorgan Chase on April 4 — the day the application was first made available to her. 

Adriana Carrig is outraged at how funds meant for true small businesses have been allocated. Courtesy of Adriana Carrig

She was counting on the funds to keep her nine full-time staffers employed. The coronavirus has wiped out all of her wholesale jewelry orders which normally make up 60% of her business. "I applied the second the program opened and uploaded my documents when I was asked to," Carrig said. 

"It was enraging to see that places like Ruth's Chris and Potbelly received millions of dollars that should have gone to true small business owners," she added. 

Perhaps moving to tamp down such ire, Shake Shack announced late Sunday that it is returning the $10 million loan it was awarded through the Paycheck Program. But that feels like too little too late for some entrepreneurs.

"It feels very grimy and not what true small businesses are about, which is helping each other, not digging our hands into the pot when they don't belong in there," Carrig said of the larger restaurant chains that qualified for the loans, which are geared to businesses with fewer than 500 employees. "For them to get funds feels like a slap in the face."

Head of U.S. Chamber of Commerce expects deal in Congress on small business loans 05:19

The Paycheck loan rules allow larger firms to apply for every restaurant they operate, so long as each location has fewer than 500 employees and is a separate legal business entity.

Carrig hasn't laid off any of her workers, but said she can't sustain her company without some help: "I broke the loan application down to the last cent — it would all have gone to payroll to keep my employees on. Now, I don't know how we will survive when everyone is working from home and getting paid in full." 

Colin McIntosh, founder of Denver, Colorado, bedding company Sheets & Giggles, is also angry that he applied for the loan program promptly but came up empty.

"I am frustrated at the amount of time and work I did making sure we were ready to go. I even paid my [chief financial officer] to help us with this," he said. "To spend valuable time and money on the application and to then get nothing is really a punch in the gut."

Jonathan Butler, co-founder of food and flea markets Smorgasburg & Brooklyn Flea, was also denied a loan despite having his paperwork prepared and getting through online about an hour after Chase's site went live on April 3. After amending his application, Chase submitted it to the SBA on April 7, Butler told CBS MoneyWatch. 

While he's disappointed he didn't get a loan, he said he doesn't begrudge bigger companies applying for the same funds. "The fault there really lies with the way Congress wrote the bill," Butler said. 

The loan wouldn't have solved his biggest business need anyway, he said.

"It makes sense for companies whose business had slowed and needed a bridge to semi-normalcy but the emphasis on payroll does not make the most sense to me as a business that has totally shut down," Butler explained. "I am more concerned with paying my rent and having enough cash on hand to re-open if and when it's possible." 

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