A roughly $2 trillion stimulus package was passed by Congress last week that includes $350 billion to aid small businesses, but a newly formed group of top chefs and restaurateurs say the package falls short in helping independent restaurants survive the economic fallout from COVID-19.
The Independent Restaurant Coalition, led by nationally recognized restaurateurs Tom Colicchio, Naomi Pomeroy and Kwame Onwuachi, sent a letter on April 6 to Congress calling for changes to the small business loan program, including a longer timeframe for use, extended repayment periods and an increase in funding.
In a conference call Monday, Colicchio, Pomeroy and Onwuachi outlined the ways in which the Coronavirus Aid, Relief and Economic Security (CARES) Act falls short in providing meaningful aid for restaurant owners. The leadership team proposed policy changes that would give restaurants, particularly independent restaurants, a shot at survival.
“This plan so far is really insufficient for restaurants’ needs,” said Colicchio, chef and owner of Crafted Hospitality, which operates seven restaurants in Los Angeles and New York City. The primary concern lies in the CARES Act Paycheck Protection Program, he said.
The rescue loan program, which has a 2-year maturity and 1% interest rate, is designed to help small businesses keep employees on their payrolls. Loans are forgiven in full if businesses keep all employees on the payroll for eight weeks, if 75% of the funds are used for employee pay, and if the funds are used for mortgage interest, rent and utilities.
“The way the plan works is that just getting two months of payroll is not even getting us to when our doors might be open, and what we really don’t want to do is to hire back our staff, have restaurants open and then they fail because there’s not business there,” Colicchio said.
The Paycheck Protection Program has also been reported as “glitchy” and “chaotic” since it launched Friday. Banks were unprepared for the flood of applicants, and it’s unclear when disbursements will begin.
In Dallas, restaurants are closing and regrouping for financial and safety reasons, and there are 1 million service industry jobs at risk statewide from closures and decreased business.
Pomeroy, owner of Beast restaurant in Portland, Ore., added that the loan program is “flawed when it comes to businesses that have already shut down, which the majority of us have.”
The Independent Restaurant Coalition is asking Congress to extend the loans to three months after the businesses are allowed to reopen rather than eight weeks from the time they receive funding, and that the payment period be extended from two years to 10 years.
“Some restaurants will struggle to qualify for 100 percent loan forgiveness. Unforgiven loans will result in restaurants being saddled with debt at a time when we can least afford it. … This is unworkable and could cause the very problem this bill seeks to prevent — the large-scale failure of small businesses,” the letter said.
The group is also asking for the program to be increased beyond $350 billion, and that a gross revenue cap of $500 million, which was included in an earlier version of the federal program, be reinstated to ensure that the program does not run out of funds.
New tax rebates, the requirement that business interruption insurance cover coronavirus, and a restaurant stabilization fund were also proposed in the group’s letter to Congress.
“We’re calling on Congress to take action that ensures independent restaurants can survive this. It’s really, really important, and the CARES Act is a small step on a giant staircase, and more is required to ensure our businesses can reopen,” said Onwuachi. “If the kitchens are the heartbeat of the home, restaurants are the heartbeat of the nation.”
