After nearly 3,000 minority- and women-owned restaurants were told their COVID-19 relief grants were rescinded because of a federal court ruling, a bipartisan group in Congress is seeking $60 billion to help the affected eateries and others.
The minority- and women-owned restaurants, along with those owned by veterans or located in poor neighborhoods, were given priority for Restaurant Revitalization Fund, or RRF, grants when the program was established in March by Congress and President Joe Biden.
But the RRF, with about $29 billion in initial funding, was oversubscribed in its first two weeks. Applications from the priority groups totaled more than the available funds.
In May, two white-owned restaurants in Tennessee and Texas filed lawsuits challenging the prioritization system, calling it discriminatory.
The federal Circuit Court of Appeals in Cincinnati agreed on May 27. Two of the three judges accused the U.S. Small Business Administration, which oversees the RRF, of “racial gerrymandering” and using “unconstitutional criteria” to award grants.
SBA responded by canceling the grants that had been approved but not funded. The remaining money in the RRF now will likely go to white-owned restaurants.
“While it appears that our work to prioritize restaurants most in need was successful in the first round, the extraordinary demand for the RRF shows that many more businesses still desperately need help,” said Rep. Earl Blumenauer (D-Oregon), the leader of the bipartisan group that’s called for more money for the program. “We must work quickly to replenish this critical relief program and ensure all local restaurants get the support needed to keep their doors open.”
A dozen senators and 150 House members are sponsoring the legislation to add money to the RRF, including Reps. Thomas Suozzi (D-Glen Cove) and Gregory Meeks (D-St. Albans).
Suozzi said on Monday, “The massive demand for the RRF shows that thousands of restaurants and catering halls are still facing financial woes due to the effects of the pandemic…It’s clear Congress must replenish and better fund this critical relief program.”
More than 362,000 restaurants have applied for RRF, with grant requests totaling over $75 billion, according to the National Restaurant Association, a trade group in Washington.
The RRF provides up to $10 million per business to make up for revenue losses during the pandemic. For businesses with multiple locations, the grant is up to $5 million per location.
The funds may be used to pay employee wages, mortgage and rent payments, utility bills, outstanding debts, construction of outdoor seating and other operating expenses. The money must be used by March 11, 2023.
SBA hasn’t publicly disclosed the names of the RRF applicants whose approvals were rescinded, though a couple of New York City restaurant owners have said they were notified they wouldn’t receive funding.
Sean Kennedy, a spokesman for the restaurant association, said, “The announcement that their grants will be awarded to others has left [women and minority restaurateurs] confused, frustrated and afraid they will have to close their doors for good.”
He urged SBA administrator Isabella Casillas Guzman to use money from the agency’s other COVID-19 relief programs to “fulfill your prior commitments to them.”
SBA spokesman Matt Coleman said, “As per long-standing agency policy spanning multiple administrations, the SBA does not comment on pending legislation.”
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