Chairs and tables can be seen outside a closed restaurant in Washington DC, United States, on April 24, 2020.
Liu Jie | Xinhua via Getty Images
After a year of unthinkable challenges for the catering industry, targeted help is on the way.
The Small Business Administration’s Restaurant Revitalization Fund opened its portal on Monday, where badly hit restaurants, bars, food trucks and more can apply for $ 28.6 billion in grants. Demand is already robust.
The White House released a fact sheet on Wednesday calling for relief to 186,200 restaurants, bars, and other eligible businesses across the country over the first two days.
For 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 requests have been made from companies with pre-pandemic annual sales of less than $ 500,000, meaning some of America’s smallest restaurants and bars are asking for relief.
The American Rescue Plan Act set up the RRF to provide funding to restaurants for pandemic-related lost revenue of up to $ 10 million per business and a maximum of $ 5 million per physical location. Funds are required to be used by March 2023 and are not required to be repaid as long as the money is used for eligible expenses such as payroll, suppliers, mortgages, maintenance and rent. The SBA said there was “extremely high demand” for the program in the early 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 spokesman said in a statement.
The industry was hardest hit over the past year. The National Restaurant Association estimates that from March 2020 through April this year, 110,000 restaurants will have closed, either permanently or on a long-term basis. The trading group also said restaurant and restaurant sales were down $ 280 billion from forecast levels.
Enough To Walk Around?
The bigger concern is whether the program has enough help to help all of the businesses that need it.
“The question everyone is asking, of course, is how long the money will last and who will run out of space when the music stops,” said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association, said in an interview. The creation of the fund is the result of years of effort, partly led by the restaurant group.
The SBA recently faced challenges with another small business support portal for their Shuttered Venue Operator program. The website closed on the first day and stayed closed for more than a week before reopening for submitting applications.
So far, the portal has been accepting requests without any problems for restaurants with difficulty, Kennedy said, apart from a slight hiccup on Monday related to an issue outside the platform.
The SBA did not immediately comment on the applications received or the previous program processes.
Operators like Pete Cortez hope to have access to help before the fund dries up. Cortez is the 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. Over the course of the pandemic, 300 employees have declined from a high of 725 before the crisis broke out.
Restaurants had to grapple with both mandatory closings to keep the spread of Covid-19 and a one-off storm that struck Texas in February under control. Cortez said he could access the paycheck protection program, but more help was needed.
“We’re blessed to just be here – it’s been a long way. We see this as an opportunity to get back on a solid footing and try to get everyone back on. We’ve lost them,” said Cortez.
Reinstatement as wages rise
Hiring brings its own challenges, he said. La Familia Cortez is facing staffing problems like so many businesses across the country including restaurants, bars and hotels. Cortez said the company was offering referral and sign-up bonuses as wages go up.
“This is one of the reasons this grant is so important to restaurants because at a time when we have been hit by a pandemic and are trying to recover from whatever we lost, we are returning to an industry There is chain break in supply. Beef and chicken prices, as well as other goods, are very expensive right now, “said Cortez. “We also don’t have enough employees and have to close restaurants or cut working hours.”
Kennedy said the challenge was being felt across the restaurant industry. Some executives have pointed to government incentives as an incentive to discourage workers from returning to work, while advocates push for higher wages for low-wage workers.
“We have a growing number of operators saying, ‘We just want to operate … we just need a workforce and an operating environment that allows us to get people back on board,” he said. “It’s a growing concern.”
PPP runs dry
In addition to 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 was exhausted and closed to most new applicants, except for an allocation to municipal financial institutions, which typically fund loans for the underserved. The program was extended to May 31, although many believed that funding would not last until that deadline.
“After more than a year of operations and serving more than eight million small businesses, the bipartisan paycheck protection program has run out of funding. The SBA will continue to fund pending approved PPP applications, but new qualified applications will only be funded through community financial institutions, financial lenders that are underserved Serving communities. The SBA is committed to providing economic aid through the numerous COVID relief programs it currently manages and beyond, “said a statement from the SBA.
More than 400,000 board and lodging companies were able to access forgivable loans through the program.