American restaurant chain Ruth's Chris Steak House will return a $20m small business loan following growing backlash over a federal coronavirus bailout that has benefited several large companies.

Ruth's Hospitality Group, which runs more than 100 steakhouses in the US, procured two $10m loans for its subsidiaries through the Paycheck Protection Program, which is intended to support small businesses following widespread closures in the wake of the pandemic.

But the funds were claimed within two weeks of its opening, leaving thousands of applicants without any recourse.

The company argued it met the eligibility requirements for relief because it has fewer than 500 employees at each location.

Several other publicly traded restaurant chains have sought relief through the $350bn fund, including a restaurant group that runs more than 1,000 Burger King franchises and the Potbelly Sandwich Shop chain, which filed for $10m.

Smaller mom-and-pop restaurants operators and advocates have been outraged with the funding disparities, raising fears that thousands of independent restaurants could collapse as the US economy returns with a flood of bailouts for large chains and franchises.

Shake Shake and Sweetgreens announced that the restaurant groups would return the $10m Small Business Administration loans they had received.

New York Congresswoman Alexandria Ocasio-Cortez, whose district has been disproportionately ravaged by Covid-19, raged at Republican lawmakers on Thursday as debate continued for another round of funding to replenish the PPP funds.

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"It is a joke when Republicans say they have urgency around this bill," she said. "The only folks they have urgency around are folks like Ruth's Chris Steak House and Shake Shack ... You are not trying to fix this bill for mom and pops."

Businesses must certify in their applications for relief that the "current economic uncertainty makes this loan request necessary to support the ongoing operations" of the business.

On Thursday, the Small Business Administration had updated its PPP application guidelines to say that it's "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."

Treasury Secretary Steven Mnuchin said that companies that cannot meet that certification should "pay back the money quickly" or be subject to investigation.

The agency said companies that return their unnecessary loans by 7 May will be considered having acted in good faith without subject to penalties.