The SBA relief fund earmarked $28.6 billion for struggling restaurants. It’s already received $65 billion in applications.
Throughout the pandemic, restaurants have struggled to access financial support from the federal government, so when the American Rescue Plan stimulus bill, which was signed into law in March 2021, included a $28.6 billion Restaurant Revitalization Fund, it was considered a lifeline. Unlike the much-maligned Paycheck Protection Program loans, this money is to be distributed as grants, not loans, and won’t have to be repaid by restaurant owners if it’s used by March 2023. But there’s one pretty big problem: The fund, which started taking applications on May 3, is already running out.
According to the Los Angeles Times, the Small Business Administration, which is responsible for overseeing the program, has received more than a quarter million applications, asking for $65 billion in financial aid. That’s more than double the amount of money in the fund, and will once again leave many restaurant owners fighting to stay afloat with no federal government aid. After a year of pandemic-related struggles, that’s a painfully familiar feeling for restaurant owners and workers alike.
Though the restaurant industry was hit harder than perhaps any other — with customers urged not to dine out, and restaurant workers at high risk of contracting COVID-19 in the tight confines of kitchens and dining rooms — food workers and restaurant owners were not prioritized for federal bailouts or industry-specific relief programs. According to a report by Yelp in June of last year, some 53 percent of restaurants that closed since March 1, 2020 went on to close permanently. Since then, the number of restaurant closings has grown each week.
The Paycheck Protection Program loans, rolled out last year to help restaurants cover staffing costs, left a lot to be desired. For these loans to be forgiven, a majority of the money had to go toward keeping staff on payroll, even though limited capacity and restrictions on indoor dining made it nearly impossible to retain and pay a full staff. And before many small restaurant owners could even get their hands on a loan, huge chain restaurants drained the fund.
For businesses that do receive this latest round of SBA funds, grants may be equal to the amount of revenue a restaurant lost during the pandemic, capped at $10 million per business, and $5 million per location. In reaction to frustration at the very limited and restrictive ways PPP money could be spent, restaurant owners have been given more autonomy to decide where they need to direct these funds to keep their businesses open and their staff employed. This enormous pool of money goes a long way in propping up restaurants as they continue to navigate the world of dining during a pandemic.
But when the program was first proposed by Rep. Earl Blumenauer of Oregon last year, he hoped the fund would distribute $120 billion in grants. According to the Times report, Blumenauer said there was anticipation that the fund would be quite popular, and that his colleagues might have to approve more funding once they saw how high demand was in relation to the drastically slimmed down fund that passed through Congress.
Restaurant owners, lobbyists, and food industry activists are frustrated that, after a year spent advocating for a restaurant-specific relief fund, the money is once again going to dry up before a majority of restaurant owners have received help. In a statement to the Times, Sean Kennedy, a spokesman for the National Restaurant Association, said that “Right now, SBA has more than $36 billion in applications from small, struggling independent businesses that will not receive funding.”
Frustration at the fund’s delayed rollout and limited impact is justified. It’s equally frustrating that, had the fund been infused with even a portion of the additional $90-plus billion that was first proposed, it would still have the resources to help many more restaurants. But while the disappointment is real and the urgency immediate, the fund has been more conscious of how the existing money will be distributed. Unlike the PPP program, which left loopholes for major chains to apply for enormous loans (franchise locations can still apply for these grants), the Restaurant Revitalization Fund aimed to reach businesses owned by women, veterans, and people from economically and socially disadvantaged groups — many of whom missed out on earlier rounds of financial relief.
The Small Business Administration prioritized these businesses by prioritizing their applications for the first three weeks of the fund’s existence. That means that in theory, the majority of grants that were accepted will go to business owners of color, women, veterans, and others that have been hard-hit by the pandemic. But it also means that countless restaurants owned by members of marginalized and oppressed communities are still hurting, and won’t see a dollar in this round of grant-giving. Hopefully, Representative Blumenauer was correct in thinking funding will be rejuvenated once his colleagues see how badly it’s needed. Hopefully, the funds come soon, because many restaurants are hanging on by a thread.
from Eater - All https://ift.tt/3hzZ30X
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