NEW JERSEY (7th District) -- The CARES Act, passed by Congress and signed by President Trump on March 27, created the $350 billion Paycheck Protection Program (PPP) designed to help small businesses pay their workers and keep their operations running. Less than two weeks later, the funding pool was depleted.

It came to light over the weekend that the money ran out not only because a huge amount of small businesses owners applied for the loans, but also because large restaurant chains snagged the low-interest, government-backed funding.

For instance, Ruth’s Hospitality Group secured $20 million in PPP money. The public corporation boasts workforce of over 5,700 employees, has 83 corporate-owned Ruth’s Chris Steak House locations and another 73 franchisee-owned restaurants. Ruth’s Hospitality Group (NASDAQ:RUTH) had $468 million in sales during 2019 and turned a profit of $42 million, according to The Wall Street Journal. Meanwhile, the commonly accepted definition of a small business is a company that is privately owned and operated, has 500 employees or less, and has a limited amount of annual revenues, dependent on the type of industry.

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Shake Shack (NYSE:SHAK), the popular upscale burger joint, which recorded more than $570 million in sales in 2019, obtained a PPP loan of $10 million. After public outcry, founder Danny Meyer, who has a net worth of $400 million, and company CEO Randy Garutti announced that Shake Shack has obtained financing elsewhere and will returning the CARES Act funding, according to an NBC News report.

Congressman Tom Malinowski (D, NJ-7) said “I was beside myself” when he heard that large restaurant chains had secured funding intended for mom-and-pop shops that had mostly been shut out of the PPP funding pool.

"We are still waiting, and it's been over a week," said Jerry Lipshitz of Hershey's Deli in Westfield, who lives in the northernmost part of Scotch Plains that is part of Malinowskl's district.

Malinowski said that the legislation was put together very quickly, and that the problem was that banks put their existing customers at the front of the line for the government-backed loans administered by the SBA.

“We authorized $350 billion to help genuinely small businesses, but that’s not the way it has shaken out,” Malinowski said during an exclusive interview with TAPinto Scotch Plains-Fanwood. “The Trump administration didn’t give guidance to make sure the mom-and-pops went first.”

“That’s why when the administration asked for more money for the program, we said ‘hold on a second’,” Malinowski said. “All of my colleagues are hearing the same things. House Democrats are insisting that some share of additional funding should go to community banks that tend to serve mom-and-pop shops and smaller, disadvantaged businesses. We will fix it.”

The congressman said that, in fairness to the banks, there are strong “know your customer laws” that guard against money laundering. He explained that those laws incentivized banks to work with companies with whom they already had relationships. Malinowski said during this crisis, they should be much more flexible.

“The time to demand documentation isn’t at the outset, but when the businesses ask for loan forgiveness (for maintaining their employment levels),” Malinowski said. “The benefit is getting the loan forgiven. We’ll have time to cross the I's and dotted the T's.”

Even with changes in the way the second round is administered, one thing is clear: more money is needed in the coronavirus funding program. Further, too few small businesses have received funding from the program, which launched on April 3. According to, a website established by group of small business owners concerned about the timeline for receiving loans from the government, only 574 of the 10,500 businesses (about 5.5%) that applied for PPP loans have received them.

“There are a bunch of small businesses who have been told that the money has run out. I am determined that everyone who qualifies will get their money,” the congressman said. “Hopefully some will be approved very quickly once we replenish the funding. We also want to learn the lessons of the last couple of weeks and fix it, not just throw money at it. Folks shouldn’t despair.”

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Malinowski said that the next round of funding will include rules that will favor genuinely small businesses that may not have the relationships with the banks. He takes heart in recent statistics he read that reported more than 33,000 small businesses were approved for funding in New Jersey. However, he is concerned that the process is both slow and complicated.

Among the congressman’s other top concerns are the lack of COVID-19 tests available (“Until we can test all the people who are asymptomatic, we can’t resume normal life.”) and assisting people who need help with unemployment insurance. (“The system was not built to handle this many claims in a short period.”)

Above all, Malinowski said the new PPP program must be fixed.

“We had to build from scratch in a few days. In my view it’s the most important thing that we have done,” he said. “When it is working, it can keep small businesses whole and will enable them to open again.”

The congressman says he cannot guess when life will return to “normal.”

“We need significantly more testing, so we do not send asymptomatic people who carry the virus back to work and school,” explained Malinowski, who has spent much of his time during the past few weeks talking to constituents by phone or via Zoom meetings. “If we do that, COVID-19 will come back in a big way, and we will have to go through same thing again.”

“The toughest thing for me is the feeling of frustration of someone who is on the verge of bankruptcy and knowing that we have created a lifeline for them that somehow it hasn’t reached them yet,” Malinowski explained. “We have to figure out a way to make this work. Sometimes in congress, they feel if they created the program, their work is done. That’s not the case. We must keep working even after passing the laws so that they do what they are supposed to do. I’m not going to relax until we’ve done that.”

Malinowski encourages small business owners to contact my office if they are having problems.

“We have been able to call banks on their behalf. I wish I could do that for 100,000 people. We are happy to see what we can do,” Malinowski said. “People are particularly eager to hear about what we’re doing and to seek assistance from congressional representatives. I’m hearing from people more than normal.”

Tom Malinowski is the U.S. Representative for New Jersey's 7th Congressional District, which covers much of all of Hunterdon County, much of Morris, Somerset, and Union County (including part of Scotch Plains), and parts Essex and Warren Counties. The Democrat was first elected in 2018 after defeating incumbent Leonard Lance. Visit To send him an email, click here.