The restaurant industry has been battered in the course of the coronavirus pandemic. Curfews and capacity limits have forced many dining establishments to change the way they operate -- and lose out on revenue in the process.
But thankfully, restaurants are getting a lifeline. It's called the Restaurant Revitalization Fund (RRF), and it includes $28.6 billion for eateries in need of relief. But restaurant owners who want that aid shouldn't wait to get it, because those who stall may lose out bigtime.
A limited pool of funds
The RRF is part of the recently signed $1.9 trillion American Rescue Plan, which also included provisions like stimulus checks, boosted unemployment benefits, and rental assistance for struggling tenants (and the landlords who desperately need them to pay up). Though there's $28.6 billion in aid available to restaurants, which will be dished out in the form of grants that don't have to be repaid, those funds could get eaten up quickly.
To qualify for a grant, restaurant owners will have to prove they've taken a hit in revenue. But that may not be a tough thing to do. The National Restaurant Association reports that 2020 revenue levels came in $240 billion lower than expected because of the pandemic. That means a lot of restaurants are apt to qualify for aid -- and will no doubt be scrambling to get it.
The Small Business Administration (SBA) has stated that underserved communities will get priority with regard to RRF funds, as well as restaurants owned by women, veterans, or economically or socially disadvantaged people (defined as those who have been subject to ethnic, racial, or cultural bias due to the groups they affiliate with). Those who fall under these distinct categories can apply for aid right now -- that window opened on May 3. But the SBA won't begin processing applications from other restaurant owners until the 22nd day after the program's launch. And the danger there is that the grant money that's been made available to restaurants could run out before everyone who wants a piece of that pie gets one.
Such was precisely what happened with the Paycheck Protection Program (PPP), which launched last year and was made available to small businesses with 500 or fewer employees. When PPP funds first became available, there was a massive scramble to apply and get approved. Those who ran into technical difficulties or didn't act quickly enough lost out on the chance to receive a forgivable PPP loan.
Thankfully, PPP funds were boosted in the course of the program so more businesses could apply for aid. But those early weeks were harrowing, and the fear right now is that the RRF experience will be similar. Plus, while the PPP got more money, there's no indication that the RRF will be eligible for replenishment once its initial $28.6 billion runs out.
The Millionacres bottom line
As such, restaurant owners right now may be nervous rather than relieved, and the landlords who rent to them may feel similarly. At this point, commercial landlords can't afford to see more restaurants close permanently, as filling vacancies is a difficult thing to do at a time when so many businesses have shuttered. The hope is that the RRF will prevent widespread closures in the restaurant industry and keep those businesses going until the pandemic is over. But ultimately, the program may fall short, and that's something commercial landlords will have to brace for.