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Paycheck Protection Program: 5 Things You Need To Know

CRN spoke with solution providers regarding their experience with the Paycheck Protection Program. Here is what we found.

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Qualification Guidelines Were Initially Vague

Although the PPP was designed to provide relief for businesses with 500 or fewer employees, some bigger businesses were also eligible.

That’s because the “interpretation of what businesses qualify” for the loans was initially very vague, said a channel executive who did not want to be identified. “Ultimately, they used the SBA’s definition of a “small-business concern,” which largely mirrors Standard Industrial Classification (SIC) codes that factor in employee count, revenue caps and business industry types to determine qualification. “This guidance was initially unclear,” said a channel executive. “Ultimately, we needed our attorneys to help determine if we qualified and initially, their opinion was different than the bank. It was very confusing.”

In the case of the hospitality industry, all restaurants, regardless of the number of employees, were eligible. That meant Shake Shack, a publicly held restaurant chain that had 8,000 employees, was eligible for the small-business program.

Shake Shack announced Sunday that it is returning the $10 million it received from the Paycheck Protection Program.

“Shake Shack was fortunate last Friday to be able to access the additional capital we needed to ensure our long-term stability through an equity transaction in the public markets,” said Shake Shack founder and Union Square Hospitality Group CEO Danny Meyer in a LinkedIn post. “We’re thankful for that and we’ve decided to immediately return the entire $10 million PPP loan we received last week to the SBA so that those restaurants who need it most can get it now.”

Future Tech Enterprise’s Venero said Shake Shack should never have been allowed to receive the small-business funds.

“That’s a hole or a gap in the program,” he said. “That should be fixed in the new round of funding. Shake Shack should not have been able to apply for these funds based on the size of the business.”

 
 
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