Shake Shack said it would return a $10 million loan as big businesses are facing criticism for accessing aid intended for small businesses through a federal loan program that was depleted in just two weeks. But cash-strapped small businesses can't access that $10 million until Congress approves more funds for the loans, called the Payment Protection Program.

In an open letter published Sunday, the founder and chairman of Shake Shack, Danny Meyer, and the chief executive officer, Randy Garutti, announced they would return the $10 million government loan after receiving other capital funds.

"We're thankful for that and we've decided to immediately return the entire $10 million PPP loan we received last week to the [Small Business Administration] so that those restaurants who need it most can get it now," Garutti and Meyer wrote.

The federal PPP loan, guaranteed through funds from the SBA, was intended as an economic boost to small businesses with fewer than 500 employees during the COVID-19 pandemic. It also served as aid for businesses in NYC after the city's loan and grant program dried up. But in 14 days, the $350 million in funds had been used up.

Garutti and Meyer called the PPP "extremely confusing," writing: "If this act were written for small businesses, how is it possible that so many independent restaurants whose employees needed just as much help were unable to receive funding? We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance."

The Small Business Administration confirmed to Gothamist that the loans could be returned to banks and other lenders in response to a question about whether Shake Shack would be able to return the aid.

"The dollars returned will go back into the overall amount allowed to be guaranteed under the CARES Act provisions," SBA spokesperson Matt Coleman said in an email to Gothamist.

Though returned loans go back into the PPP fund, new loans cannot be made until Congress allocates more money to the program, according to Coleman.

That would leave the $10 million Shake Shack planned to return held up until Congress acts.

"If PPP dollars are refunded, the refunded amount goes back into the PPP fund and can be given out to small businesses by banks/other lenders when the program is operational. Until that time, the SBA cannot approve funding requests from banks and other lenders," Coleman said.

Congress is reportedly in the process of securing an additional $310 billion for the loan program, according to the Washington Post. The SBA administrator Jovita Carranza and Treasury Secretary Steven Mnuchin urged Congress to allocate more funding to support the program last week.

In Brooklyn, 84 percent of small businesses that applied for the program hadn't received funding as of April 17th, according to a survey of 281 businesses compiled by the Brooklyn Chamber of Commerce.

60 percent of the businesses reported the SBA was "less than helpful throughout the application process." Meanwhile, 44 percent of the businesses missed April rent payments.

The president of the chamber, Randy Peers, said in a statement on Monday: "We applaud Shake Shack for highlighting the inequity in the Paycheck Protection Program that shut out many independent restaurants and small businesses."

"Their obtaining credit through the capital markets to keep their workers employed is exactly the type of option other companies should pursue if they have the means to do so," Peers added.

Shake Shack had initially qualified for the loan program because the stipulation that employers must have fewer than 500 employees only accounted for employees at each location. Shake Shack, which has 189 locations and 8,000 employees, has about 45 employees per restaurant, according to the owners' letter.

"The immediate drop in business due to the virus had caused the company to face operating losses of over $1.5 million each week, simply by keeping our doors open with the goal of paying our people and feeding our communities," Garutti and Meyer wrote.

They called on Congress to improve the program in the next round of funding for the loan program by adequately funding it, assigning a bank to each applying restaurant since some restaurants have been left out "simply because they lacked a pre-existing back or loan relationship," and extending the June loan forgiveness date to six months after a city or state has reopened its businesses.

"It's inexcusable to leave restaurants out because no one told them to get in line by the time the funding dried up," they wrote. "That unfairly pits restaurants against one another."

The loan program, which was a part of the $2 trillion CARES Act, had assisted other large employers as well. Potbelly Corp. and Ruth's Hospitality Group, which each employee thousands, were granted $10 million and $20 million, respectively, according to Politico.

Harvard University, which has more than $40 billion endowment, got nearly $9 million in aid through the CARES Act, according to the Ivy League's student newspaper, The Harvard Crimson. About half is for financial aid grants for students, the newspaper wrote. The university's funds came as the institution considered laying off contracted dining staff without pay, but after pushback from unions and student advocacy groups, the university agreed to pay all dining and catering staff through May 28th.

Even Treasury Secretary Mnuchin, who has touted the "success" of the program rolled out to 1.6 million small businesses, wrote in a tweet he was "glad to see" the burger chain would return the loan.

NYC Hospitality Alliance executive director Andrew Rigie told Gothamist in an email: "It's laudable that Shake Shack will return the $10 million, and I hope [the] money quickly gets into the accounts of small businesses who were shut out of this round of stimulus funding."

The Brooklyn Chamber of Commerce, the Real Estate Board of New York, the NYC Hospitality Alliance, and the New York State Restaurant Association are demanding the federal PPP extend its loan forgiveness date to six months after fully reopening, allow more of the cash to be used on rent payments, among other amendments.

Though the chamber's president Peers said the programs are "steps in the right direction," it has become "abundantly clear they are underfunded, and lean toward benefiting larger, well-established businesses with existing ties to lenders, limiting resources that small businesses and [minority- and women-owned business enterprise, or WMBEs] urgently need to survive."