It’s no exaggeration to say that the Coronavirus pandemic has violently upended the US economy. Safe-at-Home policies and social distancing directives have a growing majority of Americans isolating at home in an effort to reduce the spread of the virus and hopefully save lives. Shelter-in-place orders are helping to flatten the curve, but they are also putting a strain on business throughout the country. Every community is being affected, with business owners being forced to shut down operations for the foreseeable future.
One of the hardest hit sectors of the business community has been the food service industry. Restaurants and bars often operate on the slimmest of margins, and to close the doors for even a few weeks can be devastating. For a mom-and-pop café or diner a prolonged shutdown of a few months could well put the owners in danger of losing their investment entirely. Fortunately, financial support and relief is available for independent restaurant and bar owners. The federal government, along with a number of grassroots and nonprofit organizations, are taking much-needed steps to support independent restaurants and bars in these trying times.
CARES Act – Emergency Relief for Small Businesses
On March 27, 2020 President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act. The largest aid package in the history of the country the act earmarks $350 billion in financial aid for small businesses affected by the COVID-19 pandemic. The CARES act offers a variety of financial aid options for small business owners. These relief measures, managed by the US Small Business Administration (SBA) will be of special interest to independently owned and operated restaurants and bars.
- SBA Economic Injury Disaster Loan Emergency Advance – The SBA’s EIDL Emergency Advance provides up to $10,000 to eligible small businesses that have been adversely affected by the Coronavirus pandemic. Businesses in the food and hospitality industry are eligible for emergency relief funding if the currently maintain fewer than 500 employees on their payroll.
- SBA Express Bridge Loans – SBA Express Bridge Loans are available to small and medium sized businesses with an existing relationship with an SBA Express Lender. Loans are intended to provide direct and immediate financial support to endangered businesses while they formally apply for SBA disaster loans. Bridge loans are limited to $25,000 and shall be repaid by in full or in part by the borrowers EIDL loan.
- SBA Debt Relief – This program provides financial relief for small businesses with existing 7(a), 504, and microloans. The SBA agrees to pay the principal, interest and fees on outstanding loans for a period of six months. Further debt relief programs may be available to select businesses with outstanding SBA disaster loans managed by an approved SBA lending partner.
- SBA Payroll Protection Program – Payroll assistance loans are available to restaurants and bars with more than one location but fewer than 500 employees. Eligible applicants can borrow up to 2.5 times their monthly payroll. Because servers are no longer able to earn tips the payroll protection program allows full-service restaurants to calculate their payroll needs on the wages servers are currently being paid instead of the wages plus gratuities that they would have earned prior to the pandemic and its impact on the restaurant’s business.
Private Sector Support for Restaurants
Financial relief for businesses operating in the food and hospitality industry is not limited to government programs. Many privately run organizations are stepping up to provide much-needed financial support for restaurants and food service employees dealing with the impact of the COVID-19 pandemic. These programs are independently operated and are only meant to supplement government aid. The purpose of all of these initiatives is to help independently operated restaurants stay in business during the Coronavirus crisis.
- Dining Bond Initiative – The Dining Bond Initiative was launched to support independent restaurants during mandatory shutdowns. The program helps businesses to continue to bring in cash during a shutdown in exchange for future restaurant purchases. Diners can purchase gift certificates at a 25% discount that can be redeemed when shelter-at-home directives are lifted and the restaurant reopens.
The program is open to all restaurants. Restaurant owners interested in participating and join the program via the Dining Bond Initiative website.
- James Beard Foundation Food and Beverage Industry Relief Fund – The JBF Food and Beverage Industry Relief Fund is soliciting donations from private sector to support independently owned and operated restaurants impacted by the Coronavirus disaster. Restaurant owners can apply directly for micro-grants to help them keep employees on payroll, cover mortgages and rent, as well as utilities and other operating costs.
- Southern Smoke Foundation Emergency Relief Fund – Since 2017 the Southern Smoke Foundation has distributed more than $1 million in emergency relief funds to independent restaurants in crisis. The foundation is currently soliciting donations from diners and industry insiders to support relief efforts in aid of restaurants and bars impacted by the Coronavirus crisis.
Financial Support for Restaurant Workers
The temporary closure of restaurants and bars across the country means that many food service workers will soon be going without a steady paycheck. While some business owners may be able to keep their employees on a limited payroll most will have to lay off some or all of their staff. The following programs are available to help support food industry employees impacted by Coronavirus shutdowns.
- Restaurant Employee Relief Fund – With restaurants and bars closing across the country many employers are struggling to care for staff members who are missing out on a steady paycheck. The Restaurant Employee Relief fund is offering grants to industry professionals who have been adversely impacted by the COVID-19 pandemic. Grant amounts are limited to $500 per applicant.
- Restaurant Workers Community Foundation – The RWCF has launched their COVID-19 Emergency Relief Fund to solicit donations meant to support restaurant owners and employees impacted by the Coronavirus crisis. The goal is to create a relief fund for individual food service employees facing economic hardships as a result of the Coronavirus pandemic. The fund will also provide low-interest loans to businesses as a way to help maintain payroll during extended closures.
- Restaurant Opportunities Centers Disaster Relief Fund – ROC United is offering direct financial relief to food service workers impacted by the Coronavirus pandemic. Workers can apply for assistance directly through the ROC United website. Applicants will also be able to access information about relief services in their local and state communities.
Relief Aid for Bars and Bartenders
Bars and bartenders are well represented in the relief services available to the larger food service industry. However, there are a couple of relief programs that are more specific to hospitality professionals.
- USBG Bartender Emergency Assistance Program – The United States Bartenders Guild is providing financial assistance to bartenders affected by the Coronavirus outbreak. The program is partially supported by Jameson Irish Whiskey ($500,000 donation) but USBG is currently asking for further donations to support their initiative.
- Another Round Another Rally Grants – ARAR primarily supports underrepresented groups in the hospitality industry with scholarships and grants. However, in the wake of the COVID-19 pandemic the association has set aside funds to provide $500 grants to those who have lost their jobs due to the Coronavirus.
Employers and Employees Working Together
With shelter-at-home orders being issued in multiple states across the country many restaurants and bars are being forced to close their doors to their regular customers. While some restaurants may be able to continue operating in a limited capacity by serving customer via take-out and delivery, many more will have to close their doors for the duration. That is inevitably going to lead to loss of income for both owners and employees.
During this national crisis restaurant owners and their employees will have to work together to weather the storm. There is ample relief available to business owners, and we have tried to outline some of the more substantial programs designed to support restaurant and bar owners affected by the Coronavirus pandemic.
However, food service workers on payroll are likely to find it more difficult to find the support they need in these troubled times. Unemployment has been extended in most states, and we would encourage any hospitality workers who have lost their jobs due to the COVID-19 outbreak to make the necessary application to their local authorities. We also encourage restaurant and bar owners to share the information gathered here with their staff so that they can access further relief options for which they may qualify.
The hospitality industry is unique in that owners and employees are extremely dependent on one another for continued success. Working together, and looking out for one another, restaurant owners and their staff will be able to weather the current storm and come back stronger than ever when the all clear is finally sounded.