For independent restaurants devastated by the coronavirus crisis, the federal government’s $2 trillion stimulus package has provided more of a slap in the face than a shot in the arm. The $349 billion budget for Paycheck Protection Program (PPP) loans ran out in less than two weeks, and the overwhelmed banks put in charge of distributing the money prioritized bigger clients, shutting out most small food businesses.
In the D.C. area, even restaurants that received PPP money say the way the forgivable loan program is structured has created new problems. The PPP loans become forgivable — essentially free grant money — as long as recipients:
- Pledge at least 75 percent of the loan money to payroll, and the rest for mortgages, rent, and utilities
- Restore or maintain the headcount of full-time employees by June 30 to what it was before the period between February 15 and April 26
Businesses that don’t meet those provisions have to pay a 1 percent interest rate on the loans, creating more debt on top of money already due to landlords, utility companies, and suppliers.
Washingtonian reports that the group behind Chef Geoff’s, Lia’s, Cafe Deluxe, and Tortilla Coast was one of the lucky few to get PPP funding. Owner Geoff Tracy tells the outlet he’s plans to hire back 150 to 180 people to meet the rehiring provision. But he says he’ll likely be paying some of those people to stay home because the restaurants aren’t running at full capacity.
Cork Wine Bar owner Diane Gross tells Washington Business Journal that she can’t put all 29 of her employees back to work, because there’s no room for them in a store that follows social distancing protocols, and paying them all adds financial strain when she’s already facing $100,000 in debt for March bills.
About half of the 18 businesses within Neighborhood Restaurant Group have received PPP money, WBJ reports, but NRG founder Michael Babin says rehiring is difficult because some workers stand to make more money collecting increased unemployment benefits — included in the same federal stimulus package as the PPP — than they do returning to work.
According to the results of a Restaurant Association Metropolitan Washington survey reported by WBJ, only 2 percent of local restaurants that applied had received PPP funds by April 17. Another 15 percent were told they were approved but hadn’t seen the money. Nationally, only 9 percent of the PPP budget went to restaurants.
The Senate has already passed a bill that would add $310 billion in PPP funding, which moves to the House of Representatives today. But the added money doesn’t fix the structural problems in the program.
The Independent Restaurant Coalition, a lobby spearheaded by celebrity chefs Tom Colicchio and Kwame Onwuachi, blasted the new bill in a letter to Congress. The IRC would like to see the maximum loan amount run for three months after restaurants are allowed to reopen, instead of eight weeks after receiving it. The group would also like to see the period for repaying PPP loans extend from two years to 10.
- D.C.-area restaurants who actually received PPP loans are finding them a catch-22 [WBJ]
- Why Your Favorite Neighborhood Restaurants Were Shut Out of Critical Government Aid [W]’
- Restaurants Shunned From U.S. Aid Program Could Get Second Chance With New $310 Billion Bill [ENY]
- Everything to Know About How the $2 Trillion Stimulus Helps (and Fails) Restaurants [ENY]