When it comes to federal pandemic relief, a second bite of the apple has paid off for Potbelly.
The Chicago-based sandwich chain, which repaid its first $10 million Paycheck Protection Program loan under pressure to go back and get a second, was told by the Small Business Administration this week last that the outstanding balance of $10 million would be fully forgiven.
Potbelly secured the second $10 million PPP loan in August 2020 and requested forgiveness last year. The SBA has “manually reviewed” all PPP loans over $2 million to determine forgiveness eligibility, according to the agency. In March, Potbelly warned investors that he could be responsible for repaying “part or all” of the five-year note, depending on the SBA’s determination.
On July 12, Potbelly received notification from its lender, Harvest Small Business Finance, that the SBA approved the forgiveness of all outstanding principal and accrued interest totaling nearly $10.2 million, according to a Securities and Exchange Commission filing Friday.
A Potbelly spokesperson did not immediately return a request for comment on Monday.
Launched by the SBA at the onset of the COVID-19 pandemic in April 2020, the first round of the PPP offered businesses with fewer than 500 employees forgivable loans of up to $10 million to cover eight weeks of payroll. The initial $349 billion in funding ran out in less than two weeks, with many small businesses shuttered as banks reportedly prioritized large customers over family businesses.
This has led to pushback from lawmakers and small business advocates, pressuring some big small businesses, including publicly traded restaurant chains such as Ruth’s Chris, Shake Shack and Potbelly, to repay their loans.
Demand plummeted during the second round of PPP amid concerns over loan cancellation, and Potbelly decided to reapply in August 2020 as the program was set to expire. The federal government relaunched the program in January 2021 for a third round of funding.
The SBA has approved 11.4 million loans worth nearly $788 billion over the three PPP cycles. As of July 10, the SBA has canceled about 10.3 million loans worth nearly $743 billion, or more than 94% of the total value of PPP loans.
Potbelly grew from a single store on Lincoln Avenue in 1977 to a national chain. As of December, Potbelly had approximately 5,500 employees operating 397 company-owned stores and 46 franchise locations in 33 states. There are 111 company-owned restaurants in Illinois.
The company generated $380 million in revenue last year, posting a net loss of $23.8 million.