Potbelly has secured one more $10 million Payroll Safety System loan, and this time the Chicago-primarily based sandwich chain plans to continue to keep it.
The business, which returned a $10 million PPP personal loan it obtained in April underneath public pressure, disclosed it received the new personal loan in a submitting Friday with the Securities and Exchange Commission.
The financial loan was authorized Aug. 7 — a single working day just before the prolonged PPP application expired — through Harvest Small Business enterprise Finance, a California-primarily based nonbank loan provider.
“While we competent for a bank loan in the 1st spherical of the Payroll Defense Program, we returned it when it appeared like many other corporations would be remaining with out enable,” Potbelly said in a assertion. “In the up coming round, the plan was about to near with billions of pounds in accessible money continue to remaining.”
Released in April by the Smaller Organization Administration, the 1st spherical of the PPP available firms with much less than 500 staff forgivable loans of up to $10 million to include 8 months of payroll. The first $349 billion in funding ran out in significantly less than two weeks, with many smaller sized enterprises shut out, as banking companies allegedly prioritized bigger clients ahead of mom-and-pop firms.
That led to pushback from lawmakers and small-enterprise advocates, pressuring some bigger modest providers, which include publicly traded cafe chains these types of as Ruth’s Chris, Shake Shack and Potbelly, to give back again their loans.
Demand from customers fell off during the $310 billion next spherical of PPP amid worries about mortgage forgiveness. The plan was tweaked to give debtors additional versatile conditions, extending the included payroll time period to 24 months and reducing the portion of the personal loan that ought to be applied for payroll to 60%.
Regardless of extending the software until finally Aug. 8, it expired with about $130 billion in resources remaining.
Potbelly received its $10 million PPP loan all through the very first spherical via JPMorgan Chase. Harvest, its second-round lender, specializes in SBA loans, according to its web page.
The new five-year PPP financial loan is at a 1% desire fee. Potbelly intends to apply for forgiveness of a “portion of the mortgage,” according to the SEC submitting.
“To safeguard our employees’ jobs, and guidance their family members that rely on Potbelly for their livelihoods, we used for and gained a bank loan,” the enterprise explained in its assertion. “The funds will go to our dedicated personnel, to preserving work opportunities and to holding outlets open up.”
Potbelly, which grew from a solitary retailer on Lincoln Avenue in 1977 to a nationwide chain with 424 company-owned and 44 franchised retailers and much more than 5,500 employees, has struggled all through the pandemic. The organization issued a “going concern” warning right after revenues plunged all through the initial quarter.
Final thirty day period, Potbelly employed previous Wendy’s executive Robert Wright as president and CEO, succeeding Alan Johnson. For the duration of the company’s 2nd-quarter earnings call Aug. 5, Potbelly reported improving upon revenues as marketplaces reopened, and explained the likely problem issues experienced been “resolved.”
It secured the $10 million PPP mortgage two days afterwards, according to the SEC filing.
“While we have stabilized our small business in excess of the past couple months, we’re nevertheless nicely below pre-COVID revenue concentrations,” the enterprise stated in its assertion. “In addition, the virus proceeds to produce an uncertain environment in a lot of places of the nation.”