Restaurant pandemic grant program ends in a cloud of errors and confusion


A $ 28.6 billion federal relief fund for restaurants and other food businesses closed on Wednesday after running out of money, responding to less than a third of the grant applications it received.

The Small Business Administration, which manages the Restaurant Revitalization Fund, told unsuccessful applicants in an email that it was unable to fund all qualified applications due to “overwhelming demand.”

More than 370,000 business owners have requested more than $ 75 billion in funding, almost three times what the program had available. About 105,000 companies were approved for grants, which averaged just over $ 272,000.

“For 100,000 restaurants, the RRF has made their future clear and stable, but for the more than 200,000 operators excluded from funding, receiving this letter today only increases their fear and anger,” said Sean Kennedy , spokesperson for the National. Association of restaurateurs. “We need Congress to act.

Industry groups have called on lawmakers to give more money to the fund. Bills to add $ 60 billion have been introduced, with bipartisan support, in the House and Senate, but their future in a busy legislative timetable is unclear.

Restaurants and bars have been among the businesses hardest hit by the pandemic, with many forced to close for months. They were one of two industries – along with live event businesses like music clubs and cinemas – for which Congress created special relief funds. Homeowners could apply for grants to compensate for their significant losses over the past year.

The restaurant fund, which opened in May, got off to a smooth start but was bogged down in its final weeks, with thousands of grants canceled due to policy changes and thousands more stymied by delays and problems. Candidates awaiting decisions became increasingly desperate as the remaining funding dwindled.

When Congress created the Restaurant Fund in March as part of the Biden Administration’s $ 1.9 billion US bailout, it ordered the Small Business Administration to prioritize funding for businesses owned by women, people of color and veterans.

But with demand far exceeding the money available, this approach risked leaving all applicants outside the priority groups empty-handed. Several white business owners filed a lawsuit, and federal judges decided they would likely succeed in proving their claims that the program’s policy violated the Constitution’s equal protection clause. In response, the SBA ended the policy and canceled scholarships for nearly 3,000 priority applicants who had been told they would receive scholarships.

This was not the only problem with the program. More recently, grants for an unknown number of applicants were revoked due to errors.

Linda Novak, owner of Starlight, a cocktail and jazz bar in New Orleans, applied just hours after the program opened and received a notice of approval on May 21 for a grant of approximately $ 300,000. . He was told the money would be in his bank account within a week.

But it never happened. In early June, she called the customer service hotlines at her bank and the Small Business Administration. She eventually learned from her bank, Hancock Whitney, that she had rejected the deposit because it was incorrectly coded as being for a savings account. Novak – who only has a checking account for her business and said she was sure she had completed the grant documents correctly – immediately filed for a correction with the SBA, but languished for weeks.

Last week, Novak received an email from the SBA saying the money she was counting on would not be paid out due to lawsuits challenging the program’s prioritization rules. The agency acknowledged that its deposit was rejected by its bank and said it “will not be able to attempt a redistribution at this time as the legal findings of these court decisions rule out such action.”

Novak was stunned. “I assumed a guarantee from the US government was good and I could proceed as if this money was reaching me,” she said. “The first thing I did was rehire employees. For a month, I paid all these salaries that I could only pay because this grant was coming.

Kylie Sachs, owner of two coffee shops in Brooklyn called Milk Bar, has also been stuck with mistakes she doesn’t understand. She applied for loans for each of her locations and received approval notices for both in mid-May. The money arrived quickly for one, but the deposit for the second never arrived. She started calling the SBA hotline every few days and every time she was told by agency representatives that there were delays in payments, but the money was coming.

Last week, she too received an email informing her that her grant had been revoked. His candidacy had an “invalid industry flag,” the letter said, and would be quashed due to legal action.

A spokesperson for the Small Business Administration declined to comment on the cases of individual borrowers.

Sachs said she used the same industry code for both of her applications; she has no idea why one succeeded and the other failed. “You can’t get straight answers,” she said.

The loss of the subsidy, which she said was in the bottom six digits, left her stranded. “I am not in a position to hire people. I am unable to make repairs and make capital investments. None of that money goes back into the economy, ”she said.

Novak worries that she will have to shut down the Starlight if she doesn’t get the grant she has been promised. Customers are starting to return in droves, but the past year has left it with a backlog of deferred maintenance and debt. “I’m not sure I can continue without this money,” she said.

For those who got grants, money was often a lifeline. Tamra Patterson, owner of Chef Tam’s Underground Cafe in Memphis, Tennessee, received funding in May. She immediately hired more workers and gave her employees a raise of $ 16 an hour.

“It literally jump-started my business,” she said. “The last year has been like sucking air through a straw in the middle of the ocean. It finally allowed us to breathe.


About Christopher Easley

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