Update: On March 19, 2021, the SBA announced that the Shuttered Venue Operators Grant applications would launch on April 8.
Members of Congress should not have any problem getting a restaurant reservation this summer. "Right now we are in full thank-you mode," says Sean Kennedy, the National Restaurant Association's executive vice president for public affairs.
And why not. The $1.9 trillion American Rescue Plan Act, he says, finally meets a key need for an industry that has been crushed by Covid-19: cash money grants--not loans. Specifically, the relief law authorizes a $28.6 billion grant program for hard-hit foodservice businesses, dubbed the Restaurant Revitalization Fund (RRF). That program allows for eligible businesses to apply for grant money that does not need to be repaid--a pivotal element for low-margin businesses like restaurants.
Not every business owner is as thrilled by the Rescue Act. Some were dismayed that the law failed to extend the Paycheck Protection Program--in spite of widespread delays. (An extension is in the works. The House passed a bill to extend the PPP for 60 days on Tuesday, and the Senate is now weighing a similar measure.) Others were stunned by the paltry amount of aid made available to small business in general; $50 billion is just 2.5 percent of the entire package, after all.
But the restaurant industry got just what it ordered. "What we predicted in March [of 2020] was that this was going to be an earthquake, a tidal wave, [and] a tsunami all rolled into one for an industry that only has a 6 percent profit margin on a good month," says Kennedy. "We wrote Congress looking for an array of ways in which we could get help. At the top of the list was an industry-specific grant program."
The aid, which can only be used for express purposes such as rent, payroll, utilities, PPE, and supplies, is capped at $5 million per location and $10 million total. Only foodservice businesses--including bars, restaurants, and caterers--that have fewer than 20 locations will be eligible. Those that have received PPP loans are free to apply.
Delays, Despite Need
There's still no date for the RRF's kickoff. And some business owners looking at a similar program for live venues, museums, and promoters--the Shuttered Venue Operators Grant program, or SVOG, which has yet to launch--expressed concern about potential delays.
"We feel like we're on a constant roller coaster, with ups and downs on a daily basis," says Maxine Turner, the founder of Cuisine Unlimited, a catering business in Salt Lake City, whose revenue dropped 85 percent from 2019. The business that year booked $5 million in revenue. She anticipates receiving upwards of $700,000 from the RRF program, once it kicks off--and she'll put it all back into her business, as well as squirrel some away to pay her tax bill. Currently, Utah is one of 19 states taxing forgiven PPP proceeds.
That money, she adds, is needed now. "As an event company, we worry about not having events and yet [we're] concerned about a third surge," she says. "If we open too soon, we'll have a surge and be forced to close or limit capacity again ... Europe is going through this."
For its part, the SBA says it has been working overtime to get both programs up and running. In reference to the SVOG, which was authorized under the Consolidated Appropriations Act on December 27, 2020, the SBA says it is now slated to launch sometime in "early April." SBA spokesperson Andrea Roebker notes the complexity of disbursing money directly to business owners, which isn't something the agency normally does. Its main programs provide government-backed guarantees to banks that lend to small businesses.
Try to be patient, Roebker says, and get registered with the various systems the SBA will use to administer the programs if you haven't done so already: "The SBA has been building the program from the ground up and is working expeditiously to ensure all the mechanisms required by law and the federal grant application/awarding process, as well as front-end protections, are in place to ensure these vital grants are delivered to those the law intended to assist. While we don't currently have an exact date estimate for when the applications will open, right now potential applicants can work to get registered in the federal government's System for Award Management (SAM.gov), as this will be required for an entity to receive an SVOG."
SAM registration, the system used by contractors seeking to work with the federal government, is also required for the RRF program, as is getting a DUNS number. To get a Data Universal Numbering System number, head to Dun & Bradstreet. Both steps are free but can take up to two weeks to complete.
Women-owned businesses get dibs in RRF. During the first 21 days of the program, the SBA has been directed to prioritize applications from restaurants owned and operated or controlled by women. Veterans and socially and economically disadvantaged individuals also move up in line.
Thanks to that special window, Sara Dima is optimistic she'll receive funding through the RRF. She's the co-founder of R&D Foods, a prepared foods and specialty grocer in Brooklyn. Her back-of-the-napkin calculation has her business picking up another $50,000 to $75,000 in grant funding. She has also applied for and received two PPP loans. With the additional grant money, she says she plans to pay her debts, which metastasized during the pandemic. "Honestly, we are so far behind on our vendor payables due to last year's wonky revenue that I would use it to aid in getting those bills back within terms," Dima says. "I also have one small loan--less than $20,000--with a bad interest rate that I might try to pay off." She adds that some of the funds would get paid out in compensation. She and R&D's co-founder Ilene Rosen barely took a salary last year, so that they could meet payroll, pay vendors, pay rent.
Of course, there are plenty of hard-hit businesses not started by people in those groups. Depending on the level of demand, those businesses may not get the funding they need, suggests Kennedy. "Will it be enough? There's a good chance it may not be. And we'll cross that bridge when we come to it." He adds that even if the $28.6 billion program isn't enough, "it's still going to save tens of thousands of restaurants nationwide." According to the latest preliminary data from the Bureau of Labor Statistics, there were 657,670 private foodservice and drinking places in the U.S. during the third quarter of 2020. As of February of this year, these establishments employed nearly 10.3 million Americans.
There's also reason to be optimistic that the SBA will launch the RRF in short order, says Kennedy. The SBA has indicated that it will port some of its best practices in the creation of the SVOG program over to the RRF. "They are developing a lot of skills in creating the shuttered venues program that will benefit the timely rollout of the Restaurant Revitalization Fund," he says.