Publicly traded corporations like Shake Shack are damaging their reputations by attempting to entry cash meant for small companies, billionaire entrepreneur Mark Cuban mentioned Monday.
Shake Shack initially secured a $10 million mortgage by means of the Paycheck Safety Program, however introduced Sunday it can be returning the cash after accessing other forms of capital by means of the general public markets.
“Shake Shack did not give the cash again as a result of they did not need the cash,” Cuban mentioned on CNBC’s “Quick Cash.” “They noticed what the general public outcry was.”
Cuban mentioned he would inform public corporations like Shake Shack that took cash from this system that”you are going to kill your model.”
Shake Shack CEO Randy Garutti informed CNBC earlier Monday that the burger chain was ready to make sure its “long-term stability.” By returning the PPP cash, “now it is time for us to assist our buddies within the business do the identical,” he mentioned.
Garutti mentioned the corporate had utilized for the mortgage so as to have the ability to retain as a lot of its staff as doable throughout the financial hit from the coronavirus pandemic.
Shack Shack didn’t instantly reply to CNBC’s request for touch upon Cuban’s remarks.
Ruth’s Chris Steak Home and Potbelly even have been the topic of criticism after it was disclosed they’d accessed PPP loans. The vast majority of Ruth’s Chris and Potbelly areas are run by the corporate however each even have franchisees who could have utilized for loans by means of this system.
Cuban mentioned he doesn’t have an issue with franchisees who apply for loans since they don’t have the identical entry to capital markets that company headquarters do. For instance, the corporate may do a second inventory providing, Cuban mentioned.
“There’s so many various methods to method it. They need not take cash that must be accessible to essentially small companies,” he mentioned.
PPP loans have been designed for companies which have lower than 500 staff. Nonetheless, lodge chains and huge eating places have been in a position to get an exemption for areas which have lower than 500 staff.
Cuban, proprietor of the NBA’s Dallas Mavericks, mentioned he thinks restaurant chains, in addition to giant leisure or hospitality corporations, ought to have authorities cash accessible to assist them overcome misplaced revenues associated to the Covid-19 outbreak.
However any authorities help they need to obtain — whether or not it’s by means of grants or loans — ought to have strings hooked up that finally advantages U.S. taxpayers, Cuban argued.
“There must be [stock] warrants. There must be fairness. … No matter it’s, somebody’s acquired to barter a great deal for taxpayers,” Cuban mentioned.
Cuban final week criticized how some banks have been dealing with the newly created small enterprise mortgage program, telling CNBC that entrepreneurs have been being “ignored within the chilly.”
The Paycheck Safety Program, which initially had $349 billion allotted to it, ran out of cash final week. The Senate may probably vote to replenish the fund on Tuesday.
Cuban has been vocal throughout the coronavirus pandemic, arguing for presidency reduction measures that prioritize staff and places restrictions on inventory buybacks.
CNBC’s Amelia Lucas contributed to this report.
— Disclosure: CNBC owns the unique off-network cable rights to “Shark Tank,” on which Mark Cuban is a co-host.