WASHINGTON — The Biden administration has ended a federal program that provided aid for restaurants hurt financially during the COVID-19 pandemic after high demand depleted funds, leaving nearly two-thirds of eligible applicants without assistance.
Restaurant leaders are pushing for additional money to keep the program afloat but it's unclear whether Congress will act. The White House would not commit Friday to supporting legislation to replenish funds.
The U.S. Small Business Administration announced the closure of the Restaurant Revitalization Fund after exhausting $28.6 billion in funding allocated in President Joe Biden's $1.9 trillion American Rescue Plan. The program provided grants for 101,000 restaurants – representing about one-third of the 278,000 eligible applications received by the SBA since it started accepting applications May 3. The SBA received thousands more applications that were not deemed eligible.
"Due to overwhelming demand, the SBA was unable to fund all qualified applications with the original appropriation provided in the American Rescue Plan Act," the SBA notified applicants Wednesday.
Applications totaled $72 billion in requests. The SBA said it is holding applications of those that did not receive grants in case Congress provides additional funds. The administration plans to disable the program's online portal July 14. Restaurants haven't been able to apply since May 24.
Weeks after launching, the restaurant fund was dealt a blow when federal court rulings in Texas and Tennessee sided with white business owners who sued the federal government because the program gave priority to restaurants owned by minorities, women or veterans. As a result, nearly 3,000 applicants initially awarded funds did not receive the aid they were promised.
Approximately 90,000 restaurants and bars closed as a result of restrictions during the pandemic, according to the National Restaurant Association, and receipts for the industry were down an estimated $280 billion.
Biden visited a Mexican restaurant in Washington in May to highlight the program, which allowed restaurants, bars, food trucks and other food and drink establishments to apply for grants up to $10 million per business and $5 million per location. The average size of grants awarded was $283,000. Restaurants can use the money for payroll, rent, supplies and other eligible sues, and don't have to be pay it back as long as it's used by March 11, 2023.
Amanda Cohen, owner of Dirt Candy, a vegetable-based restaurant in Manhattan, was one of the hundreds of thousands of restaurateurs who sought funding but was not awarded a grant.
"It will affect our bottomline and how we're able to pay people and how we're able to recover from the past year and a half," she said. Cohen applied for aid within the first 30 minutes of the program coming online, but her request was delayed – and never fulfilled – after the SBA had follow-up questions about her application. Her restaurant totaled just 20% of its typical business during the pandemic.
"Some of the people got the funding and some of the people didn't, and I'm so happy for the people who did. But it sort of puts us in two different categories in terms of the haves and the have nots."
Including the restaurant fund in Biden's COVID-19 rescue plan – which Democrats in Congress approved in March – came after months of lobbying from the restaurant industry, which recommended $120 billion to meet the needs. Senate Majority Leader Chuck Schumer, D-N.Y called $28.6 billion a "down-payment" following its passage.
"Now we need the rest of the payment." said Erika Polmar, executive director of the Independent Restaurant Coalition, which represents small and non-chain restaurants. She said restaurants were "never under the illusion" that $28.6 billion would be enough.
Legislation introduced last month by a bipartisan group of lawmakers would provide $60 billion in additional funds to the Restaurant Revitalization Fund. The effort is led by Reps. Earl Blumenauer, D-Ore and Brian Fitzpatrick, R-Pa., and Sens. Roger Wicker, R-Miss, and Kyrsten Sinema, D-Ariz.
In a statement, White House deputy press secretary Chris Meagher said the Restaurant Revitalization Fund has provided $1 billion to veteran-owned businesses, $6.7 billion to businesses owned by socially and economically disadvantaged individuals and $7.5 billion to women-owned businesses.
"We look forward to working with Congress on ways to build on this track record of delivering for small businesses," he said, but did not commit support for the legislation.
SBA Administrator Isabel Guzman applauded the program for providing "desperately needed relief" and said the agency would continue to work to provide resources to restaurants.
Although many restaurants reopened after safety guidelines relaxed as more Americans got vaccinated from the virus, Polmar said the industry remains in a crisis. She said rising inflation has imposed new cost challenges to purchase foods. And although restaurants may look busy, she said it's often because they are operating at limited seated capacities.
"Looks can be deceiving," she said, adding that a few weeks of increased business doesn't make up for 16 months of being shuttered. "The amount of debt that these folks have is absolutely unbelievable."
Contributing: Associated Press. Reach Joey Garrison on Twitter @joeygarrison.