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Financing

A detailed look at President Biden's Restaurant Relief Fund

The aid package would provide grants of up to $5 million per unit, with few spending restrictions, and is targeted at those that need it most.
Photograph: Shutterstock

Restaurants could receive relief grants of up to $5 million each from the federal government under the draft of President Biden’s COVID aid bill currently being considered within the House of Representatives.

Documents from the House Small Business Community show that $25 billion would be earmarked specifically for restaurants under the $1.9 trillion package, which is likely to change considerably even before it leaves the House for consideration in the Senate.

The Restaurant Relief Fund would be distributed in grants ranging as high as $5 million per restaurant, or up to $10 million in total for multi-unit operations. No more than 20 locations per company would be eligible for the aid.

The amounts would be determined by subtracting an applicant restaurant’s 2020 sales from its 2019 revenues, with the aim of compensating the operations for what they lost because of the pandemic.

The money could be used for a wide variety of purposes, including the purchase of food and beverage supplies and other routine operating expenses.

The allocation process would be tweaked to provide the most immediate aid to operators deemed most in need. Those parties are defined by the current provisions as women, veterans and “socially or economically disadvantaged individuals,” according to the portion of the bill currently being considered by the House Small Business Committee.

Applications from those parties would be a priority during the first 21 days of the program, according to the text. The measure did not say when the program would begin.

Restaurants with less than $500,000 in 2019 revenues would also get a dash of special treatment. About $5 billion of the $25 billion would be reserved for operations of that size.

The provisions currently under consideration also spell out other ways that all small businesses, including restaurants, could qualify for financial relief. For instance, the current proposal would provide another $15 billion, separate from the Restaurant Relief Fund, for Economic Injury Disaster Loans (EIDL), a form of aid usually extended to victims of natural disasters such as hurricanes or earthquakes.

The measure would extend available funds to “severely impacted small businesses,” or ones that have suffered a loss of at least 50% of revenues and are struggling to meet a payroll of 10  or fewer employees.

The plan also calls for increasing the pool of money available under the Paycheck Protection Plan (PPP) by $7.25 billion, raising that total kitty to $813.7 billion.

Biden’s proposal is likely to change in large and small ways as provisions are considered and reported out by relevant committees. The whole measure would then need to be approved by a majority of the House, a likelihood given the Democratic Party’s control of the chamber, before moving to the Senate.

There, the bill could be further tweaked and molded, since membership in the chamber is equally divided between Democrats and Republicans. Along a straight party vote, Democrats would prevail because the tie-breaking vote would be cast by Vice President Kamala Harris, also a Democrat.

The National Restaurant Association and the Independent Restaurant Coalition, which both lobbied hard for the Restaurant Relief Fund, were joined by nine other industry-affiliated associations in a letter urging Congressional leaders to keep the grant program in the relief package. 

"This plan is a good first step to help restaurants, bars, and tasting rooms maintain payroll, weather the pandemic, and pay down debts," read the communication, which was sent Wednesday to the top two officers of both political parties. Providing the restaurants and bars in your communities the tools to fully reopen and reach full employment will "be the most impactful thing you can do to help the economy recover.

President Biden would no doubt sign the reconciliation bill into  law, even if several key points are tempered or eliminated. The chief executive has repeatedly asserted that a bill with less than what he wants would be preferable to no bill at all.

Update: This version of the story includes information about the industry association's communications with Congressional lawmakers about keeping the Restaurant Relief Fund in the final version of Democrats'  relief plan. 

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