- The Federal Paycheck Protection Program approved $ 13 million in relief funds for Famous Dave’s of America and Granite City Food & Brewery. According to Restaurant Business, Famous Dave’s borrowed $ 7.2 million, while Granite City borrowed $ 5.8 million. Both are owned by BBQ Holdings.
- The loans follow new restrictions on lending to state-owned enterprises – restrictions that were put in place after the initial $ 349 billion funding round dried up.
- “We are extremely grateful to be able to access the PPP loan program, ”BBQ Holdings CEO Jeff Crivello said in a statement. “As a nano-capitalized public catering company, our access to capital differs greatly from that of our larger competitors. We need these funds to retain, recall and pay our loyal employees. “
Nanocap companies trade at a lower market price than other publicly traded companies, with a capitalization of less than $ 50 million. For comparison, Shake Shack, which sparked much controversy when it entered the first round of PPP loans, has a market cap of around $ 2 billion. This disparity is reason enough for BBQ Holdings to be isolated from a similar controversy, as interpreted by Crivello’s statement.
As Restaurant Business reports, the US Treasury Department’s qualifications for PPP loans include the ability of a public company to demonstrate that these funds are essential to the survival of the business. Additionally, any loan of $ 2 million or more would be analyzed to ensure that the borrower’s size and finances justify a loan. Crivello said his company was able to certify these requirements with a “high level of confidence”.
Some may not feel the same. The second round of funding was designed to better support small businesses and the self-employed after the first round sparked a backlash in favor of large state-owned companies. Granted, Famous Dave’s doesn’t have access to cash like Ruth’s Chris, but the 130-unit small-cap barbecue concept carries more weight than the mom-and-pop shop down the street that had to. struggling to pay rent.
The National Restaurant Association has predicted that up to 44% of all restaurants closed at least temporarily on March 25, and up to 11% could remain closed permanently. Millions of employees have lost their jobs and the recovery is not expected to be quick.
In other words, mom and pop-shop are likely not the only ones struggling to pay the rent. As some analysts have expressed it, the problem is not with companies, large or small, seeking these funds, but rather the murky language describing the eligibility of the program.
And while this first round angered the Independent Restaurant Coalition, which noted that the program would not help the country’s 500,000 independent establishments reopen, the restaurant industry has struggled to procure PPP dollars in general. Less than 10% of this money went to “accommodation and food services”.
So while Famous Dave’s could risk damaging its reputation by obtaining the loan, businesses in this environment are playing for their survival.