Hot dog purveyor Nathan’s Famous Inc. in Jericho is returning a $1.2 million Paycheck Protection Program loan, citing the comments of federal officials that public companies shouldn’t participate in coronavirus relief programs.
Nathan’s said in a securities filing that it “has determined to repay and return the entire amount of the PPP loan to the lender,” after an April 23 announcement from the U.S. Treasury Department and U.S. Small Business Administration, which oversee the PPP.
The Treasury/SBA announcement came two days after Nathan’s received the loan from an undisclosed lender, according to the filing. Nathan’s executives declined to comment on Wednesday because the company is to release its fourth-quarter earnings in June.
Nathan’s had 149 employees as of one year ago. The company reported a profit of $21.5 million for the year ended March 2019 on revenue of $102 million.
Nathan’s is the latest public company to return a PPP loan after criticism from small business owners about being shut out of coronavirus relief by big corporations that can raise funds on Wall Street. The PPP exhausted $349 billion in federal loan guarantees in two weeks and has since been replenished with an additional $310 billion.
The nearly two dozen public companies exiting the PPP include the restaurant chains Shake Shack, Ruth's Chris Steak House and Potbelly Sandwich Shop and the car dealership network AutoNation.
On April 23, Treasury Secretary Steven Mnuchin, responding to the entrepreneurs’ outrage, said public companies have until May 7 to repay their PPP loans or face “severe consequences.” To qualify for loan forgiveness, a public company and its lender must certify that the company truly needed the money, he said.
The PPP consists of banks and other private lenders making loans of up to $10 million, generally to businesses with 500 or fewer employees. The interest rate is 1% with a two-year term and the entire amount is forgivable in some instances. Newsday secured a $10 million PPP loan.