Yet another national restaurant chain received money from the government’s $350 billion program intended to help the small businesses hardest-hit by the coronavirus outbreak.
Nathan’s Famous Hot Dogs, which has over 200 locations, has products “marketed for sale in over 78,000 locations” and is publicly traded on the NASDAQ, applied for and received a $1.2 million loan through the Paycheck Protection Program, according to documents filed with the Securities and Exchange Commission on Monday. Amid public backlash over large-scale restaurant and hotel chains receiving financial help from the government program, the hot dog giant reversed course and said it will now repay the loan.
The Long Island-based company, well-known for its iconic hot dog eating contest on Coney Island and its prepackaged franks available in grocery stores, initially announced that it was granted the PPP loan on April 21. The issuance of the loan came two days before the federal government revised its eligibility requirements for the program, saying prospective borrowers had to certify that they truly were in need of federal help and lacked access to other sources of capital.
After the federal Small Business Administration issued its revised guidance, Nathan’s—which, as a public company has the ability to raise money through investors—said it was “determined to repay and return the entire amount of the PPP Loan to the Lender,” according to its filing with the SEC. The SBA said that companies can do so by May 7.
The ability of Nathan’s to obtain loans in the first place provides yet another spotlight on—what even PPP defenders concede is—a shortcoming in Washington’s sweeping initiative to rescue the country’s small businesses during a time of economic collapse. The $350 billion allotted for the PPP ran out in less than two weeks, and while the program did help thousands of enterprises, many thousands of small business owners were unable to secure loans. Nathan’s loan, in short, came at the expense of other companies’ ability to secure funding, including smaller business hot dog and half smoke enterprises like Washington D.C. 's famous Ben’s Chili Bowl.
One Texas small business owner described the program as a “cluster” to The Daily Beast last week.
Congress approved another $320 billion in PPP funding last week, which became available on Monday. Demand was so high that the SBA’s online application portal crashed hours after it re-opened.
In its note on Monday, Nathan’s said that its business has been “disrupted” by the COVID-19 outbreak. The majority of its restaurants—which tend to be located in places like malls, movie theaters, and airports—are currently closed or seeing dramatically decreased traffic.
“Such closures and disruptions have materially impacted revenues at our Company-owned restaurants with significant declines since the middle of March 2020, as compared to the same period last year,” the company said.
Amid the economic upheaval, value of the company’s shares on the NASDAQ stock market have remained relatively steady, trading at around $60 per share since the end of March.