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Small Business

Hard-hit restaurants rush for lifeline as $ 28 billion in subsidies up for grabs

After a year of unthinkable challenges for the restoration, targeted aid is on the way.

The Small Business Administration’s Restaurant Revitalization Fund opened its portal on Monday, allowing hard-hit restaurants, bars, food trucks and others to apply for $ 28.6 billion in grants, and it’s already seeing strong demand.

The White House on Wednesday released a backgrounder saying that in its first two days, 186,200 qualifying restaurants, bars and other businesses across the country had requested relief.

During the first three weeks, small businesses owned by women, veterans, and socially and economically disadvantaged people have priority in processing applications. According to the White House, 97,600 applications came from eligible companies in these groups. Additionally, more than 61,000 claims were filed by businesses with less than $ 500,000 in annual revenue before the pandemic, meaning some of America’s smaller restaurants and bars are asking for relief.

The American Rescue Plan Act created the RRF to provide restaurants with funding equal to lost revenue from the pandemic of up to $ 10 million per business and no more than $ 5 million per physical location. The funds must be used by March 2023 and do not need to be repaid as long as the money is used for qualifying expenses, including payroll, suppliers, mortgages, maintenance, and rent. The SBA said there was “extremely high demand” for the program in its opening days.

“With the launch of the application portal, an overwhelming number of restaurateurs have taken the first step and successfully submitted their applications. We will start processing and funding applications shortly,” said an SBA spokesperson in a statement. communicated.

The industry has been among the hardest hit over the past year. The National Restaurant Association estimates that from March 2020 to April this year, 110,000 restaurants closed permanently or long term. The trade group also said restaurant and foodservice sales were down $ 280 billion from forecast levels.

Enough to go around?

The biggest concern is whether the program will have enough help to help all the businesses that need it.

“The question everyone is asking, of course, is how long the money will last and who won’t have a place to go when the music stops,” Sean Kennedy, executive vice president of Public Affairs of the National Restaurant Association. said in an interview. The fund’s launch is the result of a year-long effort led in part by the catering group.

The SBA recently faced challenges with another small business support portal, for its Shuttered Venue Operator program. The site was closed on the first day and remained closed for over a week before being reopened for nominations.

So far, the struggling restaurants portal has accepted applications without a hitch, Kennedy said, except for a slight hiccup on Monday related to an issue outside the platform.

The SBA did not immediately comment on the applications received or the operations of the program so far.

Operators like Pete Cortez hope to access help before the fund runs out. Cortez is the COO of La Familia Cortez restaurants in San Antonio, Texas. Now in its fourth generation, the catering group has five full-service locations. It has shrunk by 300 employees during the pandemic, down from 725 before the crisis began.

Restaurants have had to deal with both mandatory closures to help control the spread of Covid-19 and a single storm that hit Texas in February. Cortez said he was able to access the Paycheck Protection Program, but more help was needed.

“We think we’re lucky to be here again – it’s been a long road. We see this as an opportunity to really get back on track and try to rehire all the employees. We have lost them,” he said. Cortez said.

Rehire as wages rise

Rehiring brings its own challenges, he said. La Familia Cortez faces staffing issues like so many businesses across the country, including restaurants, bars, and hotels. Cortez said the company is offering referral and connection bonuses at the same time as salaries are increasing.

“This is another of the reasons why this subsidy is so important to restaurants, because at a time when we are coming out of a pandemic and trying to recover what we have lost, we are coming back into an industry where there is has supply chain disruption. The prices for beef and chicken and other commodities are very expensive right now, ”Cortez said.“ And on top of that, we don’t have enough employees. and we have to close restaurants or cut hours. “

Kennedy said the challenge is felt throughout the restaurant industry. Some leaders said the government’s stimulus measures were an incentive to prevent workers from returning to work, while advocates demanded higher wages for lower-paid workers.

“We have a growing number of operators who are saying, ‘We just want to operate… we just need a workforce and an operating environment that allows us to bring people back”, he said. he declared. “It is a growing concern.”

PPP runs dry

Beyond the Restaurant Revitalization Fund, the PPP has been a lifeline for small businesses and many restaurants. The SBA confirmed on Tuesday that general funding for the program has been depleted and is closed to most new applicants, with the exception of an allowance for community financial institutions which typically fund loans for underserved people. The program was extended until May 31, although many believed the funding would not last until that deadline.

“After more than a year of operation and serving more than eight million small businesses, funding for the bipartisan paycheck protection program has run out. The SBA will continue to fund outstanding approved P3 applications, but New eligible applications will only be funded through the community Financial institutions, financial lenders who serve underserved communities. The SBA is committed to providing economic assistance through the many COVID relief programs it currently administers and at beyond, ”the SBA said in a statement.

More than 400,000 accommodation and catering businesses have been able to access forgivable loans under the program.

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