The $29 billion fund has strict guidance on the businesses can access funding and what they can do with it.
By Kelsi Maree Borland | May 12, 2021 at 06:41 AM | LINK TO ARTICLE
The restaurant revitalization fund has the potential to drive recovery in the restaurant sector after a full year of severe dislocation—and it will likely provide better support than the PPP could. That’s because the fund comes with narrow guidelines about the restaurants that can access the money—focusing on small operations that have a clear path to recovery—and how they can use the money. Namely, advance rent and debt payments aren’t on the list.
“The fund is not intended to save anyone that is not going to make it,” Marbet Lewis, founding partner at Spiritus Law, tells GlobeSt.com. “The eligibility requirements prevent the business from being permanently closed. So, it is not intended to get anyone out of debt. It is really geared toward businesses that made it out of the pandemic and now need a little boost to help them get back to a position where they are starting to make a profit. This fund comes at a perfect time for this industry.”
In many ways this new fund will also help to offset costs that restaurant owners incurred as a result of the pandemic. “Last year, a lot of restaurants’ costs increased dramatically during the pandemic, and I think a lot of people didn’t realize that,” adds Lewis. “They had to invest in PPE; they had to invest in redesigning their floor plans; they had to invest in online technology. Those businesses that are coming out of the pandemic made those investments to survive.”
The program is not the same as the two rounds of PPP funding released as part of the larger federal relief package. That money was intended to merely keep the doors open, but it came with a turbulent rollout and distribution that left many restaurants in dire need unable to access the funding. Even worse, the money ran out almost immediately. The restaurant revitalization fund, however, will operate differently. “PPP funds were just for survival. It was just money that tried to keep people open,” says Lewis. “Even though the money came at a crucial time and owners really needed it, there wasn’t a lot of guidance on what to do with it. This program really is geared toward small businesses and there is guidance on how these funds can be used. That is a unique aspect, and I think that it will help business owners make better use of this money.”
Many restaurant owners are understandably skeptical of any new funding, but Lewis is urging owners to apply and apply early. “A lot of small business owners were really disillusioned with the PPP funding. By the time a lot of people applied, the funds were depleted. This time, we have tried to build more confidence in small business owners,” she says. “We have been encouraging everyone to apply early to get applications in, even if they weren’t part of the priority group in the first few days of the fund.”
However, there are likely to be some challenges ahead. Already, there are expectations that the funding will dry up quickly. “There was always a fear that funds wouldn’t be enough, and the truth is that we know it isn’t going to be enough. The hospitality industry hasn’t faced such a financial crisis before,” says Lewis. “The restaurant industry in particular has been the hardest hit, not just because of the loss of their patronage but also because of all of the money that they had to spend. Hopefully this fund will help to balance that a bit.” She is confident that this is the first of more funding for both restaurants and other retail segments that need relief.