With the restaurant industry in the US disproportionately affected by the coronavirus crisis, and virtually brought to its knees, there may be a glimmer of hope for the sector as the RESTAURANTS Act clears the House.
As the pandemic and its effects continue to devastate the hospitality sector, the National Restaurant Association reports that nearly one in six restaurants (representing nearly 100,000 restaurants) is closed, either permanently or long-term; nearly 3 million employees are still out of work; and the industry is on track to lose $240 billion in sales by the end of the year.
Industry leaders have been calling for government help to prop up the sector that represents the county’s second biggest employer after the state itself.
While there have been some initiatives, such as the Paycheck Protection Program (PPP), those funds have done little more than keep many restaurants on life support as restaurateurs struggle to keep their businesses and the livelihoods of their employees from going under.
While many businesses have availed of PPP forgivable loans, many are waiting for more clarity before they apply for forgiveness. The funds of the PPP failed to reach black and minority businesses in particular, as they were affected by inequities that already existed within the banking system. It’s an incredibly anxious time for anyone in the hospitality industry.
There is, though, a glimmer of hope, and it comes in the shape of the RESTAURANTS Act, which could provide a further $120 billion of funding for restaurants, since it has passed the House of Congress. The next step will be the Senate, and if passed it could secure the future of thousands of businesses.
What is the RESTAURANTS Act?
The full name of the act is the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive (RESTAURANTS) Act. If passed it would unlock $120 billion of funding for restaurants.
Who would be eligible for RESTAURANTS Act funding?
The Act would make funding available to bricks-and-mortar business who have been worst affected by the crisis. It would also offer help to catering businesses who have seen their whole model wiped out.
What funding will be available to businesses under the RESTAURANTS Act?
Restaurant Stabilization Grants would be available to cover the difference between 2019 revenue and the shortfall in the projected 2020 revenue. These grants would not have to be repaid, unless the business closes before the end of 2020, in which case unspent funds would have to be returned. If the grant exceeds revenues for 2020, the remainder would have to be paid back at 1% on a ten-year term.
What can the RESTAURANTS Act grants be spent on?
The grants could be spent on anything, including payroll, although salaries of over $100,000 per annum would be excluded.
Who can apply for a RESTAURANTS Act grant?
This programme excludes businesses that are publicly traded or part of a chain of more than 20 outlets. This is a programme designed to help small businesses, and therefore, for the first 14 days, funds from the RESTAURANTS Act would only be available to restaurants with annual revenues of $1.5 million or less. The RESTAURANT Act would set aside $60 million specifically for outreach to marginalised and underrepresented communities.