The coronavirus crisis has taken a devastating toll on restaurants, with more than 100,000 closing permanently over the course of the past year. Meanwhile, 12 months into the pandemic, many food establishments are still being forced to operate at limited capacity, which is hurting their bottom line and limiting their recovery efforts.
But now, there's good news for restaurants. On March 11, President Biden signed a sweeping $1.9 trillion coronavirus relief bill into law. The bill includes a number of notable provisions designed to help Americans get through the ongoing crisis -- stimulus checks, enhanced unemployment benefits, and expanded health insurance subsidies, to name a few. But also included in that bill is aid geared specifically toward restaurants. And that could be a real game-changer.
Help is on the way
The new coronavirus relief bill includes $28.6 billion in grant money for food establishments specifically. Traditional restaurants, bars, food trucks, and street cart vendors all qualify. The money dished out under this program, which must be spent by the end of the year, can be used to help food establishments get current on their rent, cover supplies and overhead, and pay staff.
Specifically, grants will go out to restaurants that aren't part of a publicly traded company or that don't have more than 20 locations. For the first 21 days of the program, food establishments owned by women, U.S. veterans, or economically or socially disadvantaged groups will get priority for funding. There will also be more than $5 billion in funding set aside for smaller establishments. Grants will be capped at $10 million for restaurant groups and $5 million for individual restaurants. And, as grants tend to work, that money won't need to be repaid.
A far cry from the Paycheck Protection Program
The new grant program is much more helpful to restaurants than the Paycheck Protection Program (PPP). For one thing, PPP loans were capped at 2.5 times a restaurant's monthly payroll costs for the first round and 3.5 times monthly payroll costs for the second round. But since restaurants don't tend to spend a lot on payroll, that funding was limited. This new grant program does a much better job of addressing restaurants' needs. Incidentally, restaurants that did receive a PPP loan will have that amount subtracted from the grant they're eligible for.
In fact, this new round of aid is so helpful that it may just be the thing that prevents more restaurants from closing their doors. And that would be great news for the many commercial landlords who rely on restaurant tenants to pay rent. Furthermore, getting an influx of cash could help restaurants that are behind on rent make good on those obligations, leaving their landlords with less of a shortfall.
The Millionacres bottom line
All told, the fact that restaurants are getting a targeted grant program is a very positive development. It could, in fact, be just the thing that prevents countless closures -- and a vacancy crisis for their commercial landlords -- as the pandemic continues to drag on.