Restaurant chain Kura Sushi USA canceled a $ 5.98 million federal loan to small businesses after outrage from small business advocates and policymakers over national hotel and restaurant businesses million of program funds before it dried up last week.
In a statement posted by the company on its website, the president and chief executive officer of the company, Jimmy Uba, said that Kura Sushi USA respected the rules established by the legislators but had no idea of the intensity of competition for funding.
In a filing filed Thursday with the Securities and Exchange Commission, the company said it was returning the money.
“It was a difficult decision because our employees are extremely important to us, but it is impossible to ignore the fact that our finances allow us to overcome financial difficulties for a longer period of time than independent restaurant owners,” said Uba . “We hope that these funds will be shared equitably among deserving applicants. “
Shake Shack executives also decided earlier this week to cancel a $ 10 million loan, saying that when it was announced that funding had run out, “businesses across the country were naturally in arms ”and that they were grateful for access to sector funding.
Based in Irvine, California, Kura Sushi USA serves popular Japanese cuisine on a rotating treadmill. The company, which has more than 400 branches in the United States, as well as in Japan and Taiwan, closed all of its restaurants on March 18 and was unable to offer take-out or delivery items.
By most definitions, however, Kura Sushi USA is not a small business. It is worth $ 88 million and is the US subsidiary of a Japanese-based conglomerate with more than 400 restaurants and 35 years of brand history, according to the company’s public documents.
However, due to the rules built into the economic stimulus legislation of the Cares Act, subsidiaries of Kura Sushi USA have been allowed to independently request funds for small businesses despite having the same parent company. As a result, more than 80 publicly traded companies have received money from the Paycheck Protection Program, aimed at companies with fewer than 500 employees.
Uba said in his statement that he had requested the funds because policymakers had clearly authorized such an exemption for the restaurant industry, which was one of the hardest hit in the country.
More than 8 million restaurant and food workers have lost their jobs since the start of the pandemic, according to a poll released Monday by the National Restaurant Association, which is pushing Congress to provide the industry with more relief financial. Restoration spending fell 26% nationally from February to March and fell 90% in New York, one of the epicenters of the virus.
When the small business relief measure was adopted, “we were really excited about all the restaurants – more jobs in the restaurant business were lost than in any other industry, and that was great news for everyone in our industry, “wrote Uba.
After the money ran out last week, details appeared on big chains – including Ruth’s Chris Steak House, Potbelly Sandwich Shops and big hotel owners – receiving millions of dollars in funds before the money was released exhausted. The return of the public, small business advocates and legislators from both sides has been fierce.
The law on care does not require that information on companies receiving small business loans be made public, although details have been released on some beneficiaries. The SBA has already released such information on loan recipients and says it intends to release additional information in the future.
Uba said he initially believed the program would allow all employees of the company to continue to be paid. When he learned that this was not the case, said Uba, he decided to cancel the loan.
“With the paycheck protection program, we assumed that all restaurant employees could continue to be paid, regardless of where they worked, and that the funds would be sufficient for everyone”, a- he declared. “It was a false assumption. “
The money that is returned to government from the program is being made available to other companies that are waiting, according to the Small Business Administration.
“The dollars approved for canceled loans are fed back into the P3 program and can be reused once the P3 program receives funding,” said agency spokesperson Jim Billimoria.
Officials on both sides have agreed to ban large companies with multiple affiliates from receiving the funds while they are ready to approve another huge economic recovery. On Tuesday, the Senate adopted a $ 484 billion agreement to replenish the program, and the House is expected to approve the measure on Thursday.
Asked about the big companies that get the funds, President Donald Trump said on Tuesday that “if someone has something we think is inappropriate, we will get it back.” Secretary of the Treasury, Steven Mnuchin, said that “the intention of this money was not for large public companies” and that large companies could not obtain future funds from the program.