Another twist in the SBA’s distribution of Restaurant Revitalization Fund grants took place midday Wednesday as an unknown number of previously approved applicants received rejection notices.
Although details and exact figures weren’t clear, reports of revocations surfaced across social media throughout the day, namely on Reddit and Twitter. It was confirmed by the National Restaurant Association by early evening.
“Today’s news that the SBA is yet again rescinding pledged grants is a blow to the small business owners who were already planning how the funds could help stabilize their businesses,” Sean Kennedy, executive vice president for public affairs at the Association, said in a statement. “These operators owe rent, they have outstanding invoices, and their payroll is growing. Hundreds of thousands of restaurants are still vulnerable, which is why we continue to work with both houses of Congress to move the Restaurant Revitalization Fund Replenishment Act, so the SBA will have the funds they need to complete this important mission.”
The episode follows the SBA’s move to halt 2,965 previously approved applicants payments on June 14 following lawsuits in Texas and Tennessee. When funds of the $28.6 billion program ran dry, three restaurants took aim at the RRF’s call to prioritize race and sex in its grant distribution. The lawsuits were filed against the SBA in April and May regarding the 21-day prioritization period intended to ensure women and socially economically disadvantaged operators got first crack at the funding. The lawsuits claimed it was a discriminatory policy. Plaintiffs in two of the lawsuits won their cases. A ruling in favor of the SBA was reversed on appeal in another.
The SBA accepted applications from all eligible applicants out of the gate, but only processed and funded priority group applications for the opening three weeks.
When the portal closed in late May, more than 362,000 applications seeking $75 billion in funding had funneled in. On May 19, the SBA said, of the overall submitted applications, 57 percent came from women, veterans, and socially and economically disadvantaged business owners. During the first two weeks, the SBA received applications from more than 122,000 women business owners, north of 14,000 veteran business owners, and over 71,000 economically and socially disadvantaged individuals.
The SBA halted payments to the nearly 3,000 applicants on grounds it could no longer disburse funds in order to comply with the injunction filed in Texas Federal court. As noted, the injunction stemmed from lawsuits filed in Federal court that alleged the prioritization period was unconstitutional.
According to the Independent Restaurant Coalition, the SBA informed 2,965 restaurants and bars already approved for an RRF grant that they would no longer receive funding. The SBA would now disburse the funds allocated to those applicants to members of non-priority groups, to comply with the court order.
From shares of Wednesday’s letter online, the SBA’s latest decision was based on reviewing applications “due to an invalid industry flag” during the period when it was forced to stop prioritizing. It also told operators to not apply again and that it would maintain their processed application in the “queue based on your date of application.”
But for that to likely matter, Congress would need to replenish the fund. Operators can advocate for Congress to do so by visiting this link provided by the IRC. The Restaurant Revitalization Fund Replenishment Act is looking for $60 billion in additional funding.
Some steps to take:
- Contact the SBA at 844-279-8898.
- Contact your bank to ensure that the deposit has not been blocked due to fraud prevention systems.
- Contact your Representatives to make them aware of your situation and ask for assistance.