The fund earmarked money for marginalized restauranteurs, but conservative-backed discrimination lawsuits redirected it away from those who needed it most
Throughout the pandemic, restaurants have struggled to access financial support from the federal government, so when the American Rescue Plan stimulus bill, which was signed into law in March 2021, included a $28.6 billion Restaurant Revitalization Fund, it was considered a lifeline. Unlike the much-maligned Paycheck Protection Program loans, this money was to be distributed as grants, not loans, and would not have to be paid back by restaurant owners if used by March 2023. Though it sounded like a promising program to desperate restaurateurs, the program came to a shuddering halt on June 30 when funds were depleted, leaving a trail of distressed, confused, and angry restaurant owners unsure what’s next.
According to the Los Angeles Times, the Small Business Administration, which is responsible for overseeing the program, had received more than a quarter of a million applications by early May, adding up to a need of $65 billion in financial aid. That was already more than double the amount of total money in the fund and by the time it closed, according to the New York Times, 370,000-plus business owners had applied for grants totaling upwards of $75 billion in funding. Only about 105,000 businesses were approved for grants, averaging just slightly above $272,000 per restaurant.
Though the restaurant industry was hit harder than perhaps any other — with customers urged not to dine out, and restaurant workers at high risk of contracting COVID-19 in the tight confines of kitchens and dining rooms — food workers and restaurant owners were not prioritized for federal bailouts or industry-specific relief programs.
The Paycheck Protection Program loans, rolled out last year to help restaurants cover staffing costs, left a lot to be desired. For these loans to be forgiven, a majority of the money had to go toward keeping staff on payroll, even though limited capacity and restrictions on indoor dining made it nearly impossible to retain a full staff. And before many small restaurant owners could even get their hands on a loan, huge chain restaurants drained the fund.
Unlike the PPP program, which left loopholes for major chains to apply for enormous loans (franchise locations can still apply for these grants), the Restaurant Revitalization Fund aimed to reach businesses owned by women, veterans, and people from economically and socially disadvantaged groups — many of whom missed out on earlier rounds of financial relief. The Small Business Administration prioritized these businesses’ applications for the first three weeks of the fund’s existence.
In theory, this was a great way to support businesses that were overlooked in earlier rounds of funding. Only, some white business owners sued on the basis that the prioritization of these specific communities was discriminatory. Complaints were raised by white business owners in Tennessee, Texas, and Pennsylvania, and in late May, as reported by the Times, the Small Business Administration halted payments on the originally prioritized applications. Thousands of marginalized business owners who thought that they were going to be prioritized had their approvals revoked. These business owners were told their applications would be approved “once [the SBA] completes processing all previously filed non-priority applications, and only then if the [Restaurant Revitalization Fund] is not first exhausted,” according to the Times. The lawsuits, backed by conservative groups in all three states (including one brought by former Trump administration officials including Stephen Miller) resulted in the white-owned restaurants receiving grants. Conservative groups have fought tooth and nail to ensure COVID-relief funding is not distributed and prioritized on the basis of race and gender.
In this case, thousands of restaurateurs of marginalized and oppressed communities who made investments and rehired staff assuming they would soon see money deposited into their accounts were left reeling. For businesses that were lucky enough to receive this latest round of SBA funds, grants may be equal to the amount of revenue a restaurant lost during the pandemic, capped at $10 million per business, and $5 million per location. In reaction to frustration at the very limited and restrictive ways PPP money could be spent, restaurant owners have been given more autonomy to decide where they need to direct these funds to keep their businesses open and their staff employed.
When the program was first proposed by Rep. Earl Blumenauer of Oregon last year, he hoped the fund would distribute $120 billion in grants. Blumenauer suspected from the fund’s inception that it would be quite popular, and that his colleagues might have to approve more funding once they saw how high demand was in relation to the drastically slimmed-down fund that passed through Congress. Had the Revitalization Fund been infused with even a portion of the additional $90-plus billion that was first proposed, it would still have the resources to help many more restaurants.
Blumenauer released a statement on July 1, saying that “Hundreds of thousands of local restaurants still desperately need help to keep their doors open.” The representative says that he’s introduced legislation to “add $60 billion to the Restaurant Revitalization Fund, enough to cover all outstanding applicants. In two weeks, we’ve secured more than 175 bipartisan cosponsors, but time is ticking. We need to act now before it’s too late.” If the Revitalization Fund is indeed revitalized, it’s unclear whether it will prioritize the many marginalized and overlooked business owners that it originally intended to help (and that still need funding), or whether a stream of lawsuits have permanently transformed the fund.
Updated on July 2, 2021 at 1:15 pm.