Granite City chain owner of Famous Dave’s secures $ 13 million federal loan
Minnesota-based restaurant chain BBQ Holdings, Inc., one of the state’s top 60 publicly traded companies, will not repay $ 13 million in Paycheck Protection Program (PPP) loans that could be reimbursed by the US Small Business Administration (SBA).
BBQ Holdings, which includes Famous Dave’s and Granite City chains, received the money on May 1, according to a Securities and Exchange Commission file.
If the money goes to payroll, rent or mortgage and utilities in the next eight weeks, the SBA will reimburse the bank that loaned the money to the company.
In a statement, CEO Jeff Crivello claimed that BBQ Holdings, which had total revenue of $ 82.3 million in fiscal 2019, needed government help because it had access if limited to loans for working capital. The company reported a loss of $ 649,000 for its fiscal year ended December 29, 2019, compared to a profit of $ 4.9 million for the same period in 2018.
Crivello’s company must certify to the SBA that it does not have access to working capital under a new PPP rule. Congress encouraged the SBA to release the new guidelines after publicly traded companies received hundreds of millions of dollars from a program supposedly designed to keep small businesses fully employed during the coronavirus pandemic.
All state-owned enterprises that have received PPP loan approvals are expected to repay their forgivable loans by May 7 or certify their need, a decision that subjects their applications to government scrutiny.
“As a public nano-capitalized catering company, our access to capital differs greatly from that of our larger competitors,” said Crivello’s statement. “We need these funds to retain, recall and pay our loyal employees. “
“After careful review and consultation, in accordance with guidelines provided by the SBA, we are able to certify with a high level of confidence that we meet the loan requirements,” added Crivello.
He highlighted the government-ordered closure of restaurant dining rooms to help control the spread of COVID-19 as the source of the company’s problems.
BBQ Holdings’ 2019 annual report states that the company “employed approximately 1,677 team members, of which approximately 172 were full-time salaried employees.”
The company received more than the maximum PPP loan of $ 10 million because Crivello said the SBA required it to apply with separate employer numbers from two wholly-owned subsidiaries – one application for Famous Dave’s and one for Granite City.
A single large business getting more than the presumed legal limit for P3 funding sparked outrage from many small business owners excluded from the loan program. Members of Congress who passed the COVID-19 relief bill also expressed anger and frustration, saying the PPP was intended to help businesses with very few employees and no other source of working capital.
“Congress enacted the PPP to help small businesses keep workers on their payrolls during this unprecedented crisis – not to bail out large, publicly traded companies that have other means of accessing capital.” , Senator Tina Smith, D-Minn., told the Star Tribune. . “Many small businesses have struggled for more than a month to get PPP loans, and the Small Business Administration and the Treasury Department should have done more, and still need to do more, to ensure that these funds reach small businesses. and workers. to whom they were intended by Congress.
The outcry led the Shake Shack restaurant chain to return $ 10 million and Ruth’s Chris Steakhouse to return $ 20 million in PPP funds.
Publicly traded companies played a significant role in draining a $ 350 billion PPP allocation in just 13 days. This forced Congress to appropriate an additional $ 310 billion in the hope that a fair share of the 88% of America’s small businesses with fewer than 20 employees would benefit.
BBQ Holdings’ decision to keep its PPP loans may or may not threaten its brand, said Akshay Rao, brand specialist at the Carlson School of Management at the University of Minnesota.
If customers in Famous Dave’s and Granite City think the loans are acceptable because they are legal, then the chains’ reputations are not at risk, Rao said.
If consumers want their brands to be “moral,” Rao continued, customers may think of it as the big guys getting theirs, unlike the little ones. In this case, “your brand equity could suffer in the long run”.
BBQ Holdings Inc. is one of five publicly traded Minnesota companies to receive PPP loans. He received the largest amount reported to date. Nortech Systems, a medical device company with 2019 revenue of $ 116.3 million and more than 700 employees, is second at $ 6.1 million. Nortech has not announced whether he will repay his loan or certify his need to the SBA by May 7.
Other Minnesota state-owned companies that have received PPP loans include screen printing and custom printing company Ikonics Corp. with $ 1.2 million. Several small state-owned enterprises have received six-figure PPP loans. Other public enterprises may reveal PPP loans in future securities filings.
The SBA told the Star Tribune it could not yet provide a list of individual businesses in the state that have received forgivable loans and the amounts of each loan.
Previous versions of this article inaccurate the amount of loans publicly traded companies received from the Paycheck Protection Program.