Capital

The Restaurant Revitalization Fund Comes Up $36 Billion Short

Even before the ink was dry, we knew that the $28.6 billion grant known as the Restaurant Revitalization Fund (RRF) was going to be in high demand and short on funds. Patrick Kelly, an associate administrator for the Small Business Association’s (SBA) Office of Capital Access, warned us before the application process began that there were not enough funds to provide money to all eligible applicants.

Very few, however, foresaw just how fast those funds would be depleted. Just nine days after the SBA started taking applications, Isabella Casillas Guzman, head of the SBA, announced that they had received 266,000 applications. Those applications totaled over $65 billion in relief funds.

Of those, 147,000 applications totaling $29 billion were received from the priority group.

The first 21 days of the application process are defined as the priority period. During this time, the SBA is only processing and funding businesses whose owners fall into the priority groups: women, veterans, or the socially or economically disadvantaged.

Currently, the shortfall comes to about $36 billion.

Restaurants With $50,000 or Less Annual Revenue Can Still Apply  

The SBA set aside $500 million for establishments with annual revenue of not more than $50,000 in 2019. As of May 12, they had received over 13,100 applications that totaled $330 million in funds. Restaurants and other eating establishments that meet this criterion are encouraged to submit their application if they have not done so already.

As of May 12, the SBA has distributed $2.7 billion of relief funds to 21,000 restaurants.

Mohamed Attia, managing director of the Street Vendor Project of the Urban Justice Center, had this to say in SBA’s press release, “RRF offers an opportunity for many businesses and individuals who have been excluded from the past relief effort due to the lack of documentation or immigration status by accepting applications from individuals using ITIN to run their business, many of whom are street vendors. We are looking forward to seeing the impact of it on our communities’ recovery.”

For those applications that have not been processed, there may yet be hope. In a press briefing on May 5, White House Press Secretary Jen Psaki said that in just the first two days of the RRF program, 186,200 applications had been received and “61,700 of those applications came from businesses with under $500,000 in annual pre-pandemic revenue, representing some of the smallest restaurants and bars and businesses in America.”

When asked if she expected President Biden to ask Congress for additional money for the RRF, Psaki replied, “When Congress comes back, we are happy to discuss the best ways to further support small businesses, including restaurants hurt by the crisis. So, he’s certainly open to that.”

The Request for Additional Funding

The National Restaurant Association’s EVP of public affairs Sean Kennedy is urging policymakers to replenish the RRF to maximize the relief for one of the sectors hit hardest by the pandemic.

Unfortunately, as of this writing, no additional funding has occurred. The Journal of Accountancy confirmed with SBA Public Affairs Officer Shannon Giles, who noted that “The RRF was funded for $28.6 billion, so any additional funding requests over that amount will not be funded with the current appropriation.”

There is legislation, however, currently in the House and Senate. The RESTAURANTS Act, modeled after the act introduced in June 2020, would provide $120 billion for the RRF.

Representatives Earl Blumenauer (D-Ore.) and Brian Fitzpatrick (R-Pa.), as well as U.S. Senators Kyrsten Sinema (D-Ariz.) and Roger Wicker (R-Miss.), sponsored the bipartisan legislation and released a joint statement:

“We knew this rescue program would see high demand given the intense need during the economic crisis. While our work to prioritize those most in need—including the smallest businesses and priority groups identified in the legislation—appears to be successful in the first round, the extraordinary demand for the Restaurant Revitalization fund shows that Congress must do more to help. We need to work swiftly in a bipartisan way to replenish this critical fund so that all local restaurants can access the relief required for a full recovery.”

Restaurants and other food operators are encouraged to contact their legislators, requesting that they show their support and co-sponsor the RESTAURANTS act.

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