Restaurants, bars, caterers, and other food companies devastated by the pandemic filed for help on Monday for a new federal aid program worth $ 28.6 billion, but the money is not expected to last long.
Despite some glitches after thousands appeared on the Restaurant Revitalization Fund application website when it went online at noon, the process was fairly straightforward, according to applicants.
This was a welcome change from the technical issues plaguing other small business administration utilities that manage the restaurant fund.
“It was impressively smooth,” said Sarah Horak, who owns three bars and restaurants in Grand Forks, ND. She was able to submit her first application just 10 minutes after signing up on the website.
Congress created the restaurant fund as part of the $ 1.9 trillion relief bill passed in March. For the first 21 days, the Small Business Administration will only approve claims from companies that are majority-owned by individuals who fall into one of the priority groups set by law: women, veterans, and individuals who are considered both socially and economically disadvantaged.
That latter group includes those who meet certain income and wealth limits and are Blacks, Hispanic Americans, Native Americans, Americans in the Asia-Pacific region, or Americans from South Asia, according to the agency.
Applicants from these groups are asked to certify their own eligibility for the exclusivity period. This three-week priority period alone should exhaust the fund.
The money allocated by Congress “probably won’t be enough to meet the demand that is out there,” admitted Patrick Kelley, who heads the SBA’s Capital Access Office, in a webinar last week. He hoped that Congress would provide more money if needed.
The fund offers grants of up to $ 10 million. The amount each company can receive is the difference between 2019 and 2020 gross earnings minus certain other federal aids such as loans from the paycheck protection program.
Ms. Horak went into debt more than $ 300,000 last year to keep her restaurants alive. She hopes the scholarship will help repay those loans and hire additional staff when customers return to their newly opened stores.
May 5, 2021, 6:26 p.m. ET
“We’re seeing some positive trends in traffic, but it’s still not nearly normal,” she said.
Applicants who are not eligible during the priority period nervously wait to see if there is anything left for them. Jeremy Yoder and his wife Barbie Yoder opened the Alaska Crepe Co. in Ketchikan, Alaska in 2019. He applied for a scholarship on Monday.
“We had to learn to run really lean last year,” said Yoder. The Yoders’ business relies heavily on cruise-goers, and this year – like last year – could be an almost complete loss on the tourism front.
Mr. Yoder took a full-time job in the tech industry last year to support his family and business. “We’re doing enough to keep the doors open, but we’re certainly not profitable,” he said. “We lose money every day when we’re open.”
Tamra Patterson, the owner of Chef Tam’s Underground Cafe in Memphis, was still trying to complete her application late Monday afternoon. She made it through several steps but received a message that her responses had failed the agency’s “knowledge-based authentication” test.
The SBA said in a Twitter post that it was having problems with this part of the application process. “Your place in line is reserved and you will be able to complete your application shortly,” she informed those concerned.
Ms. Patterson, who is Black, said she hadn’t been approved for any other federal assistance programs, including the paycheck protection program. “Every time I tried to apply, I ran into some kind of hiccups,” she said.
Ms. Patterson’s restaurant had sales of more than $ 1 million in 2019, she said. Shortly before the pandemic, she moved her once tiny company to a much larger area of 7,000 square meters and expanded her workforce to 38 employees.
She had to fire almost everyone after the pandemic hit. Take-out and delivery brought some revenue, but their sales fell by at least 80 percent last year, she said.
Ms. Patterson hopes the grant will give her company some breathing space. She wants to give her eleven workers who have worked “non-stop” time off and catch up on bills, such as the payments she owes her grocery vendors and other creditors.
“Just to be able to pay my rent in full and on time would be amazing,” she said.
The Small Business Administration said their goal is to respond to applicants within 14 days. An SBA spokesman declined to comment on Monday afternoon how many applications had been received.
This is the second funding program that the agency recently started. Applications were made last week for the Shuttered Venue Operators Grant, a $ 16 billion relief fund for theaters, music clubs, and other live events businesses. Almost 9,500 companies applied for this relief on the first day of the program, but the agency has not yet made any grant decisions.