Pandemic relief package offers lifeline to restaurants devastated by coronavirus
Restaurants devastated by the coronavirus outbreak are getting a lifeline from the pandemic relief package that's awaiting final approval in the House.
The bill passed by the Senate on Saturday adds money to the Paycheck Protection Program (PPP) and provides indirect help to small businesses in general through stimulus payments and unemployment benefits. But restaurants got the biggest share of direct help: $28.6 billion in grants for restaurants whose revenue fell in 2020 as a result of the pandemic.
"Restaurants, help is on the way!" Senate Majority Leader Chuck Schumer of New York promised during a press event promoting the relief package with hospitality industry leaders on Wednesday.
The relief bill calls for grants equal to the amount of restaurants' revenue losses, up to a maximum of $10 million per company and $5 million per location. Eligible companies cannot own more than 20 locations, and they can't be publicly traded. The bill sets aside $5 billion for the smallest restaurants, those whose annual revenue is $500,000 or less.
Industry groups welcomed the grants. The National Restaurant Association (NRA), an industry organization, noted that the Senate added $3.6 billion to the $25 billion allocated in the original House bill. While the $28.6 billion in the bill was only about a tenth of the amount of money the industry has lost during the pandemic, the restaurant group sees it as a win.
"It's going to keep doors open. The smallest and hardest hit are going to get the help they've needed the most," said Sean Kennedy, an executive vice president at the group.
Permanent closures
Restaurants were decimated by the pandemic that led to government-ordered shutdowns and that is still keeping many diners away. As of December 1, over 110,000 U.S. restaurants were closed either temporarily or permanently, according to the NRA, with the trade group estimating that the closures represent nearly 17% of all U.S. restaurants. In January, industrywide revenue was down more than 16% from a year earlier, the group said.
Small business advocates also have expressed support for the overall bill, and said the $1,400 stimulus payments to individuals and families as well as continued unemployment benefits will give consumers more money they can spend at small businesses.
"Anytime you're putting money in the hands of consumers, regardless of how it gets there, it helps small businesses," said Keith Hall, president of the National Association for the Self-Employed, noting that Main Street businesses like hair salons will likely benefit.
Congress added more than $7 billion to the $800 billion allotted to the latest round of the PPP that began January 11. The Small Business Administration has approved about $680 billion in loans so far during this round, and a total of $1.2 trillion since April.
The first round of the program saw overwhelming demand but thousands of minority-owned small businesses were left struggling while awaiting funding. Many minority-owned firms that applied to multiple banks early in the program were rejected, while others couldn't get banks to respond to their applications and inquiries.
President Biden on February 22 had announced changes to the PPP, in an effort to provide "more equitable access" to applicants, especially those with the smallest businesses, as well as those who live in rural communities, and with owners who are women or of color.
Concerns over extension
But small business advocates are concerned because the bill did not extend the program, which is scheduled to end March 31. Congress can still extend the PPP — it previously passed extensions after two earlier rounds of funding ended — but Karen Kerrigan, president of the Small Business & Entrepreneurship Council, called the bill "a missed opportunity" for improvements to small business pandemic relief.
Kerrigan was also concerned because lawmakers didn't increase a $150,000 limit on SBA economic injury disaster loans that many companies sought during the virus outbreak.
The bill also includes $100 million for SBA-sponsored Small Business Development Centers and other organizations that offer free advice and education to small businesses. It also contains $10 billion for the State Small Business Credit Initiative, a program aimed at helping states support lending to small companies.
Kerrigan was optimistic that the bill would have a positive effect on the economy and in turn, small businesses.
"We do anticipate an overall lift that helps to fuel the momentum and confidence that is building on Main Street," she said. But she warned, rather than spend their stimulus payments, many individuals and families will use the money for savings or pay down debt.
"Therefore, small businesses must continue to compete fiercely for available consumer dollars," she said.
CBS News' Sarah Ewell-Rice contributed to this report.