After a year of unthinkable challenges for the restaurant industry, targeted aid is on its way.
The Small Business Administration’s Restaurant Revitalization Fund opened its portal Monday, allowing hard-hit restaurants, bars, food trucks and more to apply for $28.6 billion in grants, and it’s already seeing robust demand.
The White House released a fact sheet Wednesday that said in its first two days 186,200 restaurants, bars, and other eligible businesses across the country applied for relief.
For the first three weeks, small businesses owned by women, veterans and the socially and economically disadvantaged have priority in application processing. According to the White House, 97,600 applications were from eligible businesses in these groups. Also, more than 61,000 applications were made by businesses with less than $500,000 in annual pre-pandemic revenue, meaning some of the smallest restaurants and bars in America are seeking relief.
The American Rescue Plan Act established the RRF to provide restaurants with funding equal to pandemic-related revenue losses 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 so long as the money is used on eligible 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 restaurant owners have taken the first step and successfully submitted their applications. We will begin processing and funding applications shortly,” an SBA spokesperson said in a statement.
The industry has been among the hardest hit over the course of the last year. The National Restaurant Association estimates that from March 2020 through April of this year 110,000 restaurants have closed either permanently or long-term. The trade group also said restaurant and food service sales are down $280 billion from projected levels.
Enough to go around?
The bigger concern is if the program will have enough aid to help all the businesses that need it.
“The question that everybody is asking, of course, is how long is the money going to last and who’s not going to have a place to go when the music stops,” Sean Kennedy, executive vice president of public affairs for the National Restaurant Association said in an interview. The launch of the fund is a result of a yearlong effort led in part by the restaurant group.
The SBA recently faced challenges with another small business aid portal, for its Shuttered Venue Operator Program. The site was closed down on its first day and remained shuttered for more than a week before being reopened for application submissions.
So far, the portal for struggling restaurants has been accepting applications smoothly, Kennedy said, save for a slight hiccup Monday that had to do with an issue outside the platform.
The SBA did not immediately comment on the applications received or the program’s operations so far.
Operators such as Pete Cortez are hoping to access aid before the fund runs dry. Cortez is chief operating officer of La Familia Cortez restaurants in San Antonio, Texas. Now in its fourth generation, the restaurant group has five full-service locations. It is down 300 employees over the course of the pandemic from a high of 725 before the crisis hit.
The restaurants have had to grapple with both mandated closings to help control the spread of Covid-19 and a once-in-a-lifetime storm that walloped Texas in February. Cortez said he was able to access the Paycheck Protection Program but more aid is needed.
“We feel that we’re blessed just to be here still — it’s been a long road. We see this as an opportunity to really get back on solid footing and try to rehire all the employees. We lost them,” Cortez said.
Rehiring as wages rise
Rehiring is bringing its own challenges, he said. La Familia Cortez is facing staffing woes like so many businesses across the country, including restaurants, bars and hotels. Cortez said the company is offering referral and sign-on bonuses at the same time wages are rising.
“That’s another one of the reasons why this grant is so important to restaurants, because at a time when we’re coming off of a pandemic and trying to recover from everything that we lost, we’re coming back to an industry where there’s supply chain disruption. Beef prices and chicken prices and other goods are very expensive right now,” Cortez said. “And on top of that, we don’t have enough employees and we’re having to close restaurants or reduce hours.”
Kennedy said that challenge is being felt across the restaurant industry. Some executives have pointed to government stimulus as an incentive to keep workers away from heading back to the job, while advocates are pushing for higher pay for low-wage workers.
“We do have a growing number of operators that say, ‘We just want to operate … we just need a workforce, and an operating environment that allows us to bring people back in,'” he said. “It’s 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 Tuesday that general funding for the program had been exhausted and was closed to most new applicants, save for an allocation for community financial institutions that typically fund loans for the underserved. The program was extended to run through May 31, although many believed the funding would not last through that deadline.
“After more than a year of operation and serving more than eight million small businesses, funding for the bi-partisan Paycheck Protection Program has been exhausted. The SBA will continue funding outstanding approved PPP applications, but new qualifying applications will only be funded through Community Financial Institutions, financial lenders who serve underserved communities. The SBA is committed to delivering economic aid through the many COVID relief programs it’s currently administering and beyond,” the SBA said in a statement.
More than 400,000 businesses in accommodation and food service were able to access forgivable loans under the program.
Source: Business - cnbc.com
