Official figures have stated that his company Yeezy was approved for a loan worth between $2m and $5m (approximately £1.6m and £4m) that secured 106 jobs.
Osbourne, 67, believes it's "embarrassing" for the 43-year-old rapper to have sought government help, citing his personal wealth.
Speaking on her US show The Talk, the mother-of-three said: "I thought it was like mama and papa type companies that really don’t have that much profit in the bank, so you know they need help to keep people’s jobs and everybody going.
“And I just think that when you have that sort of cash, it’s embarrassing to ask when you have it yourself. You have it, you have more than enough to keep 100 people going, so why ask the government, take from the government?”
She went on continued: “I just don’t get that. When you are so wealthy, your family, everybody in your family is so wealthy, why are you doing this? I think he should give the money back.”
Back in April, Forbes reported that West had become a billionaire due to his stake in the Yeezy brand.
Kanye recently extended his congratulations to wife Kim Kardashian-West in a strange tribute as he claimed she had also reached billionaire status.
It came after a 20% stake in her KKW Beauty company was sold to City for $200 million but Forbes reports Kardashian-West is not quite a billionaire as she’s worth $900 million with a 72% stake while her mother Kris Jenner holds 8%.