Restaurants can no longer apply for financial assistance from the federal government’s two main COVID relief programs for small businesses, but many are overlooking the third option still awash in funds, according to the U.S. Small Business Administration (SBA).
The Economic Injury Disaster Loan (EIDL) program was created in December to provide emergency working capital to small businesses that cannot cover their normal operating expenses. Companies can currently borrow up to $500,000. SBA Administrator Isabel Guzman has directed the agency to raise the cap to $2 million, though the date of the increase has not been set, according to other SBA officials.
The loans carry a fixed rate of 3.75% for the 30-year term, with no penalty for early repayment and no option for forgiveness. The money can be spent over a 24-month period for such things as rent and debt service.
Two related programs provide assistance in the form of grants to small enterprises in low-income areas. Applicants can receive up to $15,000.
Only establishments in disadvantaged locales, as determined by U.S. Census income data, are eligible for the grants. But many qualifying businesses may not realize they’re located in one of those designated zones, according to SBA officials. They note that a typical businessperson is not going to sort through Census data to gauge the household incomes of their market.
The SBA has created an interactive map that allows restaurants and other small businesses to check if their location makes them eligible for the aid. If they are, the enterprises can apply for two forms of assistance:
- Grants of up to $10,000 for businesses that employ fewer than 300 people and have suffered at least a 30% year-over-year drop in revenues for an eight-week stretch since March 2, 2020. The initiative is known as the Targeted EIDL Advance program and is different from the similarly named EIDL Advance initiative, which has been shut down after running out of money.
- Additional grants of up to $5,000 for businesses that employ fewer than 10 people and have seen revenues drop by at least 50% for two consecutive months since March 2 of last year. The option is known as the Supplemental EIDL Targeted Advance program.
A restaurant or other small enterprise can collect both grants, up to a maximum of $15,000. Any grant awarded through the now-defunct EIDL Advanced program counts toward that cap.
The grants are only available to small businesses that apply for an EIDL loan. The applicants can qualify for the advances regardless of whether or not they are approved for the loan. An operation approved for a loan can also turn it down and still apply for the grants.
The SBA convened a press conference Wednesday to call attention to the EIDL, which has been tweaked several times by Guzman. Officials said that many eligible businesses in need of financial assistance may not be aware of the EIDL options.
They revealed that only $1.5 billion of the $30 billion earmarked by Congress for the Targeted Advance program has been allocated to date, and only $500,000 million of the $5 billion set aside for the Supplemental Targeted Advance channel has been awarded.
Two other SBA programs that provided assistance to restaurants are now in idle mode. The Restaurant Revitalization Fund, a $28.6 billion pool reserved for grants of up to $10 million, was put on hold within roughly 21 days of its start because grant requests far exceeded the funds available.
The restaurant industry is lobbying hard to get the fund replenished. A bipartisan measure introduced in both chambers of Congress would allocate another $60 billion for the program. Guzman has indicated that the money could be quickly distributed to applicants who submitted an application before the process was suspended.
The federal government’s other major assistance program for small businesses, the Paycheck Protection Program, was discontinued on May 31, the sunset date set by Congress.