Thursday, April 30, 2020

Cosi Sues SBA After Being Denied PPP Loan Due to Its Being in Bankruptcy

A local chain of dining spots that filed for bankruptcy and closed nearly all of its Boston-area locations earlier this year is now suing the U.S. Small Business Administration after being rejected for a federal stimulus loan.

According to an article from the Restaurant Business site, Cosi filed a lawsuit against the SBA earlier this week after being denied a Paycheck Protection Program (PPP) loan because the company is in bankruptcy. The Charlestown-based business was hoping to receive as much as $3.7 million to help maintain payroll and said that several other companies were able to secure loans just before their bankruptcy filings, but the article indicates the SBA requires that companies can't receive loans if they are actually in bankruptcy at the time. Cosi filed for bankruptcy in February and is looking to emerge from it as more of a catering company.

The PPP, which is part of the CARES Act, has been criticized for allowing national restaurant chains to be granted funding while also running out of money within two weeks of its introduction. (Most of the chains have since said that they will return the loans.)

by Marc Hurwitz (Also follow us on Twitter at @hiddenboston)

[A related post from our sister site (Boston's Hidden Restaurants): List of Restaurant Closings and Openings in the Boston Area]