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New Bill Proposes $120 Billion in Grants to Support Independent Restaurants

The grants wouldn’t have to be repaid

Interior of empty restaurant, with plants hanging above windows. Edvard Nalbantjan / Shutterstock

A newly proposed bill could go a long way in supporting small and medium-sized restaurants that have struggled to access and make use of Paycheck Protection Program (PPP) loans.

On Wednesday, May 20, Rep. Earl Blumenauer of Oregon announced plans to introduce the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive (RESTAURANTS) Act of 2020 — a mouthful, but worth it for the acronym. “Local, independent restaurants are the beating heart of our communities. They need relief now,” the representative said in a press release announcing the proposed legislation.

If passed, the act would create a $120 billion grant program. Unlike the Paycheck Protection Program, this bill is tailored to small restaurants, and would infuse them with the cash needed to stay open through the rest of the year at mandated limited capacity, with very few strings attached.

The proposed RESTAURANTS Act white papers note that “[p]revious efforts to help small businesses such as the Paycheck Protection Program are too restrictive for restaurants and do not address their specific challenges.” Notably, the RESTAURANTS Act provides grants that do not need to be paid back, whereas PPP loans are only forgiven if all full-time staff are rehired at at least 75% of their pre-pandemic salary by the end of June, and are kept on payroll for eight weeks. This has proven extremely difficult for small restaurants that are operating at a limited capacity, or have not yet been cleared to reopen by their state or county. Restaurants that accept PPP loans must also spend the majority of that money on payroll.

Through the RESTAURANTS Act, funds would not be accessible to publicly traded companies or chains with more than 20 locations doing business under the same name. This would prevent major chain restaurants — many of which took advantage of a PPP program feature that allows companies with 500 or fewer employees per location to receive millions of dollars in assistance — from applying. By the time major chains were granted loans, the first round of funding had been depleted, and many small restaurants were left unassisted.

Funding would be available until the end of 2020. The grant would cover a restaurant’s difference between revenue from 2019 and the anticipated revenue through 2020, and be capped at $10 million. It could be used to cover payroll, benefits, mortgage, rent, protective equipment and cleaning supplies, as well as debts and outstanding vendor invoices. If a restaurant closed before the end of 2020, remaining funds would have to be returned. The act also notes that if a grant exceeded a restaurant’s actual revenue by the end of 2020, the grant would be converted to “a loan with a 10-year term at 1% interest.”

In response to the extreme difficulty women and people of color have faced in securing PPP loans, the RESTAURANTS Act would be tailored to support “traditionally marginalized and underrepresented communities.” The first two weeks of funding would be reserved for restaurants making less than $1.5 million in revenue each year, focusing particularly on those “owned or operated by women or people of color.”

The act has a long way to go before it has any chance of being signed into law, but it has seen early support from chefs and restaurant groups, including the Independent Restaurant Coalition — an advocacy group that took part in a restaurant relief roundtable discussion at the White House earlier this week. Many of the act’s proposed plans are reflected in a letter the coalition published in late April, requesting a new stabilization fund be created for independent restaurants.

Scroll to read the white papers in full.

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