As far as federal pandemic relief goes, a second bite of apple was worth it for Potbelly.
The Chicago-based sandwich chain, which repaid its first $10 million Paycheck Protection Program loan under pressure only to go back and get a second, was notified by the Small Business Administration last week that the balance outstanding $10 million will be forgiven in full.
Potbelly took out the second $10 million PPP loan in August 2020 and applied for forgiveness last year. The SBA “manually reviewed” all PPP loans over $2 million to determine eligibility for forgiveness, according to the agency. In March, Potbelly warned investors that he could be liable to pay “all or a portion” of the five-year note, depending on the SBA’s determination.
On July 12, Potbelly received notification from her lender, Harvest Small Business Finance, that the SBA had approved the forgiveness of all outstanding principal and accrued interest totaling nearly $10.2 million, according to a filing Friday. by the Securities and Exchange Commission.
A Potbelly spokesman did not immediately return a request for comment Monday.
Launched by the SBA at the start 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 dried up in less than two weeks, with many smaller businesses shuttered, as banks reportedly prioritized larger clients over family businesses.
That drew pushback from lawmakers and small-business advocates, putting pressure on some larger small businesses, including publicly traded restaurant chains like Ruth’s Chris, Shake Shack and Potbellyto repay their loans.
Demand fell during second round of PPPs amid concerns over loan forgiveness and Potbelly decided to apply again in August 2020, as the program expired. The federal government relaunched the program in January 2021 for a third round of funding.
The SBA approved 11.4 million loans worth nearly $788 billion during the three PPP rounds. As of July 10, the SBA has forgiven about 10.3 million loans worth nearly $743 billion, or more than 94% of the total PPP loan value.
Potbelly has grown from a single store on Lincoln Avenue in 1977 to a national chain. As of December, Potbelly had about 5,500 employees operating 397 company-owned stores and 46 franchised locations in 33 states. There are 111 company-owned restaurants in Illinois.
The company generated $380 million in revenue last year, reporting a net loss of $23.8 million.