Restaurants and bars were among the businesses hardest hit during the pandemic, with many forced to close for months, and others shutting down permanently. With the passage of the American Rescue Plan Act, the Restaurant Revitalization Fund was created to help businesses recover from devastating financial losses.
When RRF applications first became available, the first 21 days of the application period prioritized low-income businesses owned by women, minorities and veterans. Restaurants, breweries, and caterers can use the money to cover costs like previous rent, mortgage, and payroll. The funds must be used by March 2023.
The fund was launched on May 3, and on May 15, the SBA said it had received 147,000 requests nationwide from companies seeking $ 29 billion in relief funds. Each candidate could apply for grants equal to their lost revenue from the pandemic, with a cap of $ 10 million per company and $ 5 million per location.
When the $ 28.6 billion federal program quickly ran out of money, approximately 2,600 Minnesota claimants were left without assistance. Some, including Minnesota Representative Jim Hagedorn, were outraged.
“The Restaurant Revitalization Fund launched by the SBA in May has prevented thousands of small American businesses from receiving aid simply because they are not seen as a ‘priority’ by the current administration,” said Hagedorn. said in a statement. “To be clear, saving places for business owners who have certain racial, economic or social qualities is reverse and anti-American discrimination.”
The priority system was not absolute, however – hundreds of ânon-priorityâ restaurants in Minnesota still got the funding they requested. Here’s who actually got the money in Minnesota – and what Congress is doing to get more funding to help those who didn’t.
Who has the money
The SBA released data in early July with details of which restaurants got grants and how much they received, as well as demographic information. In total, the state of Minnesota received $ 525 million with an average of $ 305,983 per company, with grants ranging from $ 1,500 to $ 10 million.
In Minnesota, the SBA recorded 1,717 companies that received funding. The SBA did not include information on the total number of applicants in Minnesota, so those numbers only reflect approved applications.
Restaurant Revitalization Fund Recipients, Minnesota
Source: US Small Business Administration
Of these businesses, 23% identified themselves as socioeconomically disadvantaged, meaning that the owners of that business identified themselves as “Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, or Native Americans. Asian subcontinent. Thirty-six percent were classified as low to moderate income, 46 percent were female, and 8.7 percent were veteran. Some restaurants fit the description of more than one âpriorityâ category.
Some restaurants received funding that did not meet the SBA’s “prioritized” description, meaning they were not socio-economically disadvantaged, low-income, or owned by women or veterans. . In Minnesota, 393 companies, or about 23% of grant-receiving institutions, did not meet the criteria for “priority.”
At the national level, the RRF responded to less than a third of the grant requests it received, whether priority or not. The SBA told unsuccessful applicants in an email that it was unable to fund all qualified applications due to “overwhelming demand.”
Restaurateurs and politicians agree that the RRF was not enough to help a majority of restaurants offset the social and economic destruction caused by the COVID-19 pandemic. Now members of Congress are asking for more.
Other funding may be on the way
Rep. Dean Phillips, co-founder of Minnesota coffee chain Penny’s Coffee, introduced a bill in May called the Restaurant Recovery Fairness Act, co-led by Republican Rep from Texas, Beth Van Duyne. (Penny’s Coffee was not listed as a recipient of an RRF grant.)
Phillips described the bill’s goal as adding a “vital surveillance component” to the SBA’s RRF, while also providing additional funding.
“By providing oversight and transparency to the Restaurant Revitalization Fund, this bipartisan bill would be a victory for small businesses and accelerate our recovery from this unique crisis,” Phillips said in a statement.
Republican officials from Minnesota Hagedorn and Pete Stauber signed the Restaurant Recovery Fairness Act. The bill was referred to the House Committee on Small Business on May 25, but has seen no action since.
âSBA programs are absolutely vital for entrepreneurs and should be open to all entrepreneurs without separating applicants into preferred categories, special classifications and priority groups,â Hagedorn wrote in a letter to SBA administrator Isabel Guzman. “These programs can mean the success or failure of a small business and should not occupy a place for some with certain racial, social or economic qualities, but not for others.”
Minnesota Representative Angie Craig announced in June that she was a co-sponsor of a bill called the Restaurant Revitalization Fund Replenishment Act, which would provide $ 60 billion to replenish the RRF.
Phillips and Minnesota Rep. Betty McCollum join Rep. Craig in co-sponsoring this bill. There is a accompanying bill to the Senate, but none of the senators from Minnesota, Amy Klobuchar and Tina Smith, co-sponsored this bill. The future of the two bills is unclear and the House bill is currently under consideration by the House Small Business Committee.
âThe way I think about it, we asked these businesses to shut down,â Craig told MinnPost in an interview in June. “A lot of these companies, you know, lost a lot of revenue because they were trying to protect the Minnesotans and keep them healthy, and so I think we need to come together and put some extra money into this program. . “