Even though many restaurant owners have already applied for financial assistance, there are distinct sources of relief that many restaurant owners have overlooked. With over $52 billion of lost revenue, just 17% of operators think their establishment’s sales anytime this year will catch up to 2019 levels. With bankruptcy estimates starting at one in four restaurants, grants and low-interest loans are still a lifeline for owners.
The COVID-19 pandemic is far from over, with over 14,790 new cases and 761 deaths reported just today. Federal, state, municipal, corporate, non-profit, and crowdfunded options bear repeating. Below is a list of available options and the latest news as of this morning.
Paycheck Protection Program
By far the largest fiscal relief program for restaurant owners, the PPP’s $659 billion is roughly 10% of the $6 trillion worth of stimulus packages approved this year. SBA will waive a restaurant owner’s entire PPP loan — converting it to a grant — so long as they qualify for loan forgiveness. New applicants can apply directly through a SBA approved PPP lender.
The Small Business Administration (SBA) has approved 4,475,599 Paycheck Protection Program (PPP) loans from 5,454 lenders totaling $510.2 billion. That means 77% of the program’s total $659 billion has been exhausted, according to data as of 5pm EDT on June 2, 2020.
Interestingly, due to loan repayments, total PPP funds have not depleted during the last week. In fact, there is an additional $301,840,182 in the program today versus May 28.
Recall that repayment of PPP loans is required from borrowers who do not qualify for loan forgiveness per SBA’s waiver process.
On Monday, Senate Majority Leader Mitch McConnell fast-tracked the Paycheck Protection Program (PPP) Flexibility Act, hoping for nearly unanimous consent in the Senate. If signed into law by President Donald Trump, the Flexibility Act will extend the forgiveness period from 8 to 24 weeks, reduce the payroll threshold from 75% to 60%, and create a safe harbor for businesses that can only open at 50% capacity, among other concessions.
Microloans are a lesser known, partially forgivable form of debt relief from SBA. At most 43% forgivable based on our analysis, the forgivable portion of Microloans can nevertheless provide a substantial, grant-equivalent cash infusion for restaurant owners. Interested applicants can apply directly through a SBA approved Microloan lender.
GoFundMe Small Business Relief Initiative
Social crowdfunding platform GoFundMe and social review platform Yelp have partnered to create the Small Business Relief Initiative, a program to provide microgrants to small businesses that have been negatively impacted by COVID-19. The initiative provides $500 matching grants to qualifying businesses that raise at least $500 on GoFundMe. With over $60 million in crowdfunding and matching donations to date, the program is modestly sized in comparison to federal programs, yet a perfect match for independent restaurant owners who can raise at least $500 from their community.
A myriad of regional grants and donation programs are still available. Applicants should check their local news stations for current resources, where new programs arrive by the day. The amounts and types of grants vary by region.
The following programs are currently unavailable, but worth watching for imminent funding renewals.
Restaurant Employee Relief Fund
The National Restaurant Association Educational Foundation (NRAEF) has reviewed and approved 25,000 grants, and has stopped accepting new applications. Occasional funding renewals come into the program, such as when PepsiCo added $3 million on April 27. Restaurant owners can follow updates from NRAEF on Twitter here. New donations to the Restaurant Employee Relief Fund (RERF) arrive daily, including another $365,000 gift just yesterday.
Economic Impact Payments
All $1,200 payments to individual tax filers have been issued by the U.S. Treasury. If anyone has not received their check or deposit, they may personally check their payment’s status on the Internal Revenue Service website.
A second round of $1,200 payments is part of a proposed $3 trillion renewal that narrowly passed the House of Representatives in a 208-199 vote, but is currently blocked in the Senate. If any renewal is approved, it will likely need to be far less than that proposed amount. “The number that we need which gets thrown around is about $1 trillion,” said Matt Hornbach, Morgan Stanley’s Global Head of Macro Strategy, live on television this morning.
Economic Injury Disaster Loans
Ultra-low interest Economic Injury Disaster Loans (EIDL) loans and their associated $1,000 cash advances were originally available to restaurant owners, but SBA has limited new applications to U.S. agricultural businesses. Restaurateurs are no longer eligible to apply at this time.
If the above mentioned $1-3 trillion renewal passes the Senate, SBA might allow restaurants to apply for EIDL loans and forgivable cash advances. Updates will be posted to this government webpage.
Facebook Small Business Grants Program
Facebook says it received “overwhelming amount of applications” and will be “providing new resources soon.” The original program was funded with $100 million. Grants were awarded to 30,000 small businesses.