What was the amount of Benihana's gain on CARES Act Loan Forgiveness in 2021?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
f the proceeds were used for qualified purposes within a specified period and if at least 60% was spent on payroll costs. The Company used all of the proceeds from the CARES Act Loans for qualified purposes in accordance with the CARES Act and SBA regulat
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the company recognized a gain on CARES Act Loan forgiveness of $18.5 million for the year ended December 31, 2021. This gain resulted from the forgiveness of loans obtained under the Paycheck Protection Program (PPP) created by the CARES Act. These loans were initially taken out in May 2020 by two of Benihana's subsidiaries.
The subsidiaries, The ONE Group, LLC (related to STK restaurants) and Kona Grill Acquisition, LLC (related to Kona Grill restaurants), received loans of $9.8 million and $8.5 million, respectively. The loans were eligible for forgiveness if the proceeds were used for qualified purposes, with at least 60% spent on payroll costs. Benihana used the funds to support the reopening of in-person dining and bring back approximately 3,000 furloughed employees.
Benihana applied for forgiveness of the CARES Act Loans in February 2021, and the loans were forgiven between June and July 2021. The $18.5 million gain represents a one-time financial benefit for Benihana in 2021, reflecting the successful utilization and subsequent forgiveness of these government-backed loans. This type of loan forgiveness is not a recurring event, so prospective franchisees should not expect similar gains in future years.