The National Restaurant Association is calling on the Small Business Administration to disburse $180 million in unused funds from the Restaurant Revitalization Fund to applicants who did not receive money when the funds were first allocated.
The money was highlighted in a report published July 14 by the U.S. Government Accountability Office (GAO), the ultimate auditing agency for the U.S. government. The funds include $24 million set aside for litigation and $56 million returned by recipients or their financial institutions. Some of the recovered funds also come from financial awards that were administratively offset by the Department of Treasury (collecting past due debts, i.e. child support payments) and returned to the SBA.
Congress appropriated $28.6 billion to the SBA in March 2021 as a part of the American Rescue Plan Act of 2021 (ARPA). The goal was to help members of the foodservice industry get back on their feet in the wake of financial hardship brought on by COVID-19. In a letter to SBA administrator Isabella Casillas Guzman, the Association emphasized that although over 100,000 restaurants have been helped by the RRF, more than 177,000 applicants are waiting to see if they’ll receive funding.
“Restaurants remain battered with worker shortages, runaway food costs, and an uncertain level of customer confidence in the coming months. The need for relief has not abated,” Sean Kennedy, the Association’s executive vice president for public affairs, said in the letter.
The GAO report states “SBA officials said they plan to award the remaining funds, but were taking additional time to confirm that any new awards would comply with the terms of legal decisions regarding the priority groups.” The ARPA designated certain groups including “women, veterans, and socially and economically disadvantaged small businesses” to be prioritized in the program’s first 21 days. This designation was met with three federal lawsuits, which found this priority period was unconstitutional because of its use of race and sex-based preferences.
In the report, SBA representatives noted RRF awards weren’t supposed to be subject to administrative offsets and that the organization is working with the Department of Treasury and Department of Justice to fix the issue. The Association also said the ARPA doesn’t create a $24 million litigation set aside for the SBA.
The letter sent by the Association said money should be used to supplement the RRF, as efforts to replenish the fund failed to pass Congress. In May, the Senate failed to pass the Small Business COVID Relief Act of 2022, which would’ve provided $40 billion for RRF replenishment and $8 billion in support for other industries strapped by the pandemic.
“While ARPA does direct returned or reclaimed RRF awards to the Department of Treasury, it would be consistent with the spirit of the law to utilize all unobligated funds to address the RRF shortfall,” Kennedy said in the letter.
This comes at a time where restaurants have improved since the pandemic, but are struggling with things like labor and food shortages.
“Now more than ever, every dollar appropriated by Congress for restaurant relief needs to be unlocked and put in the hands of operators struggling to keep their doors open. We urge the SBA to take every step to disburse all remaining funds in a fair and timely manner,” Kennedy said.