According to official figures, West’s company Yeeezy was approved for a loan worth between $2m and $5m (£1.6m and £4m), which helped save 106 jobs.
Appearing on The Talk, her CBS daytime talk show, Osbourne said that West should return the money to the government.
She 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?”
Osbourne 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.”
West has recently been in the news after announcing that he intends to run for president in the 2020 US elections, although experts have suggested that this could be unlikely. The College Dropout star has yet to file the required federal paperwork and is too late to appear on certain state ballots.
He was named a billionaire by Forbes in April, thanks in part to his lucrative stake in the Yeezy footwear brand.
In a scattershot interview with the publication, he announced that he was no longer supporting Donald Trump, and revealed plans to model his prospective White House on the fictional African nation of Wakanda from Black Panther.