Despite outrage on Main Street and new pressure from the Treasury Department this week, several publicly traded companies that received payroll relief funds from the Small Business Administration oppose demands to return the cash. The companies said that the Paycheck Protection Program loans have allowed them to keep employees on the payroll and that they disagree with the federal government's move to make it harder for public companies to receive emergency funds. The outrage stems from the belief that these companies could easily tap the equity or debt markets to raise cash. Bruce Davis, chairman and CEO of Digimarc, said that the notion that all public companies have easy access to vast capital markets at any time is mistaken. "The goal of the program is to give small businesses some time to see how things were going and to prevent a precipitous reduction in the workforce," he said. "All I see is a knee-jerk reaction to Shake Shack," he said. "Policymakers rushed back and said 'If you're public you don't qualify.' [But] they're not thinking of us: It's getting oversimplified and in a crude manner that will be a disservice to companies like mine." Davis said the PPP loan helps him keep his 215 skilled workers on the job at Digimarc, a Beaverton, Oregon-based tech company that creates invisible digital identifiers for everything from driver's licenses to bank notes. The SBA funds are critical, he said, since the company is currently operating at a loss and only generates some $23 million in annual revenue. "The notion that we're a big tech company with access to big capital is flawed," he said. "To return [the PPP funds] would be breaching fiduciary duty." CNBC reached out to the 41 biggest publicly traded companies that had received PPP loans to see if they would be returning the funds in light of the Treasury Department's new guidelines. Six affirmed that they had no plans to return the funds, five said they will (or had) returned the money while 30 either did not respond or said their decision was pending. The federal program was designed to assist struggling small businesses cover payroll costs and keep Americans employed during the coronavirus outbreak.

PolarityTE, a $38 million biotech company based in Salt Lake City, echoed Davis' comments. "We are a small-cap company with a low market price, which means capital market participants will not have an interest in raising capital for us," the company said. "In short, we have the need for assistance the PPP was intended for and we applied for the loan to meet that need."

Government's threat

The company comments came a day after the Treasury Department and SBA on Thursday issued new guidance on which companies qualify for the loans. The SBA warned Thursday that large public companies who tapped the PPP before the rule change can avoid government scrutiny by returning the relief loans in two weeks. "Borrowers still must certify in good faith that their PPP loan request is necessary," the SBA said. "It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification." "Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith," it added.

Treasury Secretary Steven Mnuchin discusses details for economic relief during the daily coronavirus response briefing as Small Business (SBA) Administrator Jovita Carranza listens at the White House in Washington, U.S., April 2, 2020. Tom Brenner | Reuters

But Digimarc's Davis represents just one executive at scores of public companies that received hundreds of millions of dollars in forgivable loans this month from the PPP. By one measure, 184 public companies have received a total loan value of $695 million, per data analytics firm FactSquared. Critics have blasted those companies in recent days for what they see as unfair, taxpayer-backed loans to multimillion-dollar, well-connected companies that already benefit from access to the vast public markets for funding. The fallout deepened as companies worth more than $100 million in the stock market successfully applied for relief. Companies including DMC Global, Wave Life Sciences and Fiesta Restaurant Group (which employed more than 10,000 as of its latest annual report) won the loans, according to a Tuesday research note from Morgan Stanley. The SBA's rule change on Thursday came as the House of Representatives passed a $484 billion supplemental relief package to replenish an initial $349 billion program for small businesses. The program depleted its initial amount last week and requires the new funding to continue lending.

Ruth's Chris, Shake Shack

Some well-known companies like Ruth's Hospitality and Shake Shack, have already decided to return their PPP loans amid public backlash and the government's new pressure. Shake Shack, a company worth $1.7 billion with more than 7,000 employees, said earlier this week that it would return the $10 million loan from the SBA. Meanwhile, the owner of the Ruth's Chris Steak House chain said Thursday that it would refund the $20 million it received. But the rule change, and public outrage, has forced some of the smaller public companies who've received the loans to face a key question. Return the Paycheck Protection Program loans and recoup public image? Or keep the funds and potentially prevent layoffs down the road? Kura Sushi USA, a subsidiary of a Japanese restaurant chain, said that after much deliberation and angst it chose to cancel its $5.98 million federal small business loan. "Receiving a loan not only meant that we could continue to keep paying the remaining staff on payroll, it meant that we could also rehire all of the employees that had been furloughed," Kura Sushi President and CEO Jimmy Uba said in a statement. "We never considered how intense the competition for the loans would be and applied for one immediately." "Today, we made the decision to return our PPP loan," he added. "This was a difficult decision because our employees are extremely important to us, but it's impossible to ignore the fact that our finances allow us to weather financial hardship for a longer period than independent restaurant owners."

A pedestrian wearing a protective mask walks past a Shake Shack restaurant in Washington, D.C., U.S., on Monday, April 20, 2020. Adnrew Harrer | Bloomberg | Getty Images

Optinose, a specialty pharmaceutical company based in Yardley, Pennsylvania, echoed those sentiments in announcing that it, too, would be returning its $4.4 million loan. "We are hopeful that both the money returned to Treasury by Optinose and other companies and the additional $320 billion stimulus passed by Congress this week will facilitate relief for a larger number of small businesses, including many of the physician practices we serve," a spokesman said.

Confusion over guidelines