Restaurants and bars were among the hardest-hit businesses during the pandemic, with many forced to close for months, and others closing their doors permanently. With the passage of the American Rescue Plan Act, the Restaurant Revitalization Fund was established to help businesses bounce back from devastating financial losses.
When RRF applications first became available, the first 21 days of the application period prioritized low-income, woman-, minority- and veteran-owned businesses. Restaurants, breweries and caterers can use the money to cover costs like previous rent, mortgage and payroll. The funds must be used by March 2023.
The fund launched May 3, and by May 15, the SBA said it had received 147,000 applications nationwide from businesses seeking $29 billion in relief funds. Each applicant could request grants equal to their pandemic-related revenue losses, with a cap of $10 million per business and $5 million per location.
When the $28.6 billion federal program quickly ran out of money, around 2,600 applicants in Minnesota were left without aid. Some, including Minnesota Rep. Jim Hagedorn, were outraged.
“The Restaurant Revitalization Fund launched by SBA in May shut out thousands of American small businesses from receiving aid simply because they are not viewed as a ‘priority’ by the current administration,” Hagedorn said in a statement. “To be clear, saving spots for business owners that have certain racial, economic or social qualities is reverse discrimination and un-American.”
The priority system wasn’t absolute, though — hundreds of “non-prioritized” restaurants in Minnesota still did get the funding they requested. Here’s who actually got the money in Minnesota — and what Congress is doing to secure more funding to help those who didn’t.
Who got the money
The SBA released data in early July with details on which restaurants got grants and how much they received, along with demographic information. In total, the state of Minnesota received $525 million with an average of $305,983 per business, with grants ranging from $1,500 to $10 million.
In Minnesota, the SBA recorded 1,717 businesses that received funds. The SBA did not include information on the total number of applicants in Minnesota, so these numbers only reflect the approved applications.
Of those businesses, 23 percent identified as socioeconomically disadvantaged, meaning that owners of that business identified as “Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, or Subcontinent Asian Americans.” Thirty-six percent qualified as having low to moderate income, 46 percent were woman-owned and 8.7 percent were veteran-owned. Some restaurants fit the description of more than one “priority” category.
There were some restaurants that got funding that did not fit the “prioritized” description set by the SBA, meaning that they were not socioeconomically disadvantaged, low-income, or woman- or veteran-owned. In Minnesota, 393 businesses, or approximately 23 percent of the establishments receiving the grants, didn’t meet the “priority” criteria.
Nationally, the RRF fulfilled fewer than a third of the grant requests it received, priority or not. The SBA told unsuccessful applicants in an email that it was unable to fund all qualified applications because of “overwhelming demand.”
Restaurant owners and politicians agree that the RRF was not enough to help a majority of restaurants offset the social and economic destruction caused by the COVID-19 pandemic. Now, members of Congress are pushing for more.
More funding may be on the way
Rep. Dean Phillips, a co-founder of Minnesota coffee chain Penny’s Coffee, introduced a bill in May called the Restaurant Recovery Fairness Act, co-led by Republican Texas Representative Beth Van Duyne. (Penny’s Coffee was not listed as a recipient of an RRF grant.)
Phillips described the bill’s purpose as adding a “vital oversight component” to the SBA’s RRF, while also granting additional funding.
“By providing oversight and transparency to the critical Restaurant Revitalization Fund, this bipartisan bill would be a victory for small businesses and accelerate our recovery from this once-in-a-generation crisis,” Phillips said in a statement.
Minnesota Republican Reps. Hagedorn and Pete Stauber signed onto the Restaurant Recovery Fairness Act. The bill was referred to the House Committee on Small Business on May 25, but has not seen any action since then.
“The SBA’s programs are absolutely vital to entrepreneurs, and must be open to all entrepreneurs without separating applicants into preferred categories, special classifications and prioritized groups,” Hagedorn wrote in a letter to SBA Administrator Isabel Guzman. “These programs can mean a small business’ success or failure, and should not hold places for some with certain racial, social or economic qualities but not others.”
Minnesota Rep. Angie Craig announced in June that she was a cosponsor of a bill called the Restaurant Revitalization Fund Replenishment Act, which would provide $60 billion to replenish the RRF.
Joining Rep. Craig in cosponsoring this bill are Phillips and Minnesota Rep. Betty McCollum. There is a companion bill in the Senate, but neither of Minnesota’s Senators, Amy Klobuchar and Tina Smith, have cosponsored that bill. The future of both bills are unclear, and the House bill is currently under consideration by the House Committee on Small Business.
“The way I think about it, we asked these businesses to shut down,” Craig told MinnPost in an interview in June. “Many of these businesses, you know, lost significant revenue because they were trying to protect Minnesotans and keep them healthy, and so I think we have got to come back together and pass additional money for that program.”