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The SBA may free up $180M for restaurants, but don’t celebrate yet

The agency is looking at ways it can release the remaining Restaurant Revitalization Fund dollars, but there are hurdles it must cross, and it would help just a fraction of those waiting for assistance.
SBA restaurant revitalization fund
The U.S. Small Business Administration may free up leftover restaurant relief funds, but big hurdles remain. / Photograph: Shutterstock.

The U.S. Small Business Administration is looking at ways it can release $180 million remaining in the Restaurant Revitalization Fund (RRF) that the National Restaurant Association demanded last week. But that doesn’t mean operators should start celebrating.

“I would not be buying champagne much less put it on ice at this point,” Sean Kennedy, EVP of public affairs for the association, said in an interview on Wednesday. “This should be a layup. But in Washington, nothing is ever easy.”

Yet the SBA appears willing, he said, to look at releasing funds that the Government Accountability Office (GAO) said was remaining in the $28.6 billion pool Congress created last year to help restaurants hit hard by pandemic-related service restrictions.

The agency still must cross some hurdles before it can do that, however. First, $24 million of it was set aside for legal expenses, something the restaurant association disagrees with. The SBA has asked the U.S. Dept. of Justice whether it can release those funds for grants to restaurants.

The agency is also looking to determine if any other government agency must give the go-ahead to release the funds, or whether they must be turned over to the U.S. Treasury Dept.

There is also the matter of the amount: $180 million represents less than half a percent of the $40 billion estimated to be needed to cover the 177,000 grant requests that did not get fulfilled after funding ran out last year.

At that point, it becomes a question of how those funds would be distributed. Would the agency simply fund the next grant requests in the queue? Or would it search for a formula to provide some funding for all restaurants that didn’t get anything? Either way, the result is likely to leave a lot of people unhappy.

Still, the result represents some progress in an effort to find at least something for restaurants that were unable to get grant dollars. It also follows a series of disappointments in bids to get the fund replenished with enough to fulfill all the unmet grant requests.

“They are committed to trying to find a way where we can buy champagne,” Kennedy said. “But it’s not just their decision. Those conversations are ongoing.”

He noted that the association has also briefed small business committees in both the House and Senate staff on its findings of the economic state of restaurants, as well as the GAO report. “That’s money Congress has already spent,” Kennedy said. “They have every incentive to ensure it’s going into the accounts of struggling restaurants.”

Congress approved the RRF last year, a rare instance of the federal government stepping in to provide broad-level relief specifically to restaurants. The funds were available in grants of up to $10 million.

The funds quickly dried up, leaving 177,000 operators that would have otherwise been eligible for grants unable to get one. Congress has thus far refused to replenish the funding, and chances of that happening at this point appear slim at best.

The $180 million was revealed by a GAO review of the fund. Some of those dollars were reserved for legal issues. But the rest, $156 million, was from awards returned or money clawed back because the operators didn’t meet borrowing standards. The restaurant association last week demanded those funs be returned.

“The SBA needs to unlock every last dollar and put it into the hands of restaurant operators forced to shut down through no fault of their own,” Kennedy said.

While the money is not anywhere close to the amount needed to fund the unpaid grants, it’s something. “The industry is at a point where we as an association are obligated to look under the SBA’s sofa cushions to fund it,” Kennedy said.

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