After the Chicago-based Potbelly fast-food chain announced Saturday it was giving back a controversial $10 million federal loan, Illinois Gov. JB Pritzker said other big companies “that don’t need it” should also not receive taxpayer dollars from Washington.
With the coronavirus pandemic devastating the economy, the federal government passed a stimulus bill last month that created the Payment Protection Program, a forgivable loan fund administered by the U.S. Small Business Administration.
But the PPP effort quickly came under heavy criticism, as many publicly traded, large companies received millions of dollars while small businesses waited, and the original pot of funding for the program was depleted within weeks.
“I think companies that don’t need the PPP money should not accept it,” said Pritzker, a multi-billionaire Democrat who had a long career as an investor before running for governor in 2018.
Pritzker said companies have “an obligation” to not take stimulus funding if they “don’t need it in order to keep … their employees paid and on payroll or their operations going.”
The governor said he defined a small business as a company with less than 200 employees. The SBA’s loan program is open to companies that have as many as 500 workers who primarily live in the country.
Potbelly Corp. executives told Crain’s Chicago Business earlier in the week that they intended to keep and spend “every penny” of their $10 million federal loan, even as other PPP beneficiaries – including the New York-based Shake Shack hamburger chain and the Florida-based Ruth’s Chris Steak House chain – announced that they were giving the money back.
The federal government reportedly put pressure on publicly traded companies to return the loans immediately.
In the statement Saturday, Potbelly said sales had “dropped dramatically” because of the coronavirus outbreak, which prompted them to seek the government loan.
“We were surprised and disappointed when the fund was quickly exhausted, leaving many without help,” Potbelly said. “We are returning the PPP loan after further clarification from the Treasury Department. We will continue to seek alternatives to help support our employees and enable them to return to work so they can serve our loyal customers.”
An Associated Press investigation found at least 147 publicly traded companies disclosed getting about $555 million from the initial, $349 billion pot of federal loan funds.
In addition to Potbelly, the AP reported, the Illinois public companies that swiftly got PPP loans were Broadwind Energy of Cicero ($9.5 million loan), Continental Materials Corp. of Chicago (nearly $5.5 million), Westell Technologies of Aurora ($1.6 million), Nanophase Technologies of Romeoville ($951,600) and Acquired Sales Corp. of Lake Forest ($149,623).
The federal government has not released the complete list of PPP loan recipients, but on Friday, President Donald Trump signed a bill providing another $320 billion for the small-business loan program.
Pritzker: More help needed for small businesses
Pritzker said the federal program “has been very difficult for small businesses to access.”
“I’m very concerned about that,” he said.
Illinois has diverted $90 million to give grants to small businesses, Pritzker said, but he added, “It’s not enough.”
“I mean, there’s no way the state can do what the federal government can do, and that’s why those federal programs are so important,” the governor said at his daily news briefing. “I’m going to be talking to the legislature, our legislature, about implementing a program that will support small businesses, but I also think the federal government needs to step up to the plate here.”
Many businesses have been forced to close because of Pritzker’s stay-at-home order last month, which was intended to slow the spread of COVID-19 in the state. He announced this week that he was extending the order through May, allowing only businesses such as grocery stores – which have been deemed essential – to keep their doors open to the public.
Illinois COVID-19 cases surpass 40,000
On Saturday, state officials said another 80 people who tested positive for the coronavirus died in the last 24 hours. That brought the number of victims in Illinois in the COVID-19 pandemic to 1,874.
The total of positive tests for the coronavirus was nearly 42,000 out of more than 200,000 tests that have been administered.
The state’s top health official, Dr. Ngozi Ezike, said Saturday that almost 12,000 tests for COVID-19 were performed in Illinois in the past day. Testing has ramped up drastically compared to the first month of the outbreak.
At the state’s daily news conference, Ezike also warned against “injecting, ingesting, snorting household cleaners.” Although she did not specifically mention Trump, the comment was a clear response to the president’s statements Thursday about the potential use of cleaners to treat people with the coronavirus.
“I hate to have to do this, but I’d like to address some of the myths, rumors and general misinformation about how to protect yourself from COVID-19,” she said. “Some recent examples include the use of a detergent solution for a sinus rinse and gargling with a bleach and mouthwash mixture in an attempt to kill coronavirus.”
Ezike said there had been a “significant increase” in calls to the Illinois Poison Center in the last couple days. A spokesman for the center said those calls are up 60% in the two days since Trump’s comments compared to the same period last year.
On Friday, Trump said he had meant to sound sarcastic when he suggested the possibility of injecting disinfectants into coronavirus patients.
Dan Mihalopoulos is a reporter on WBEZ’s Government & Politics Team.