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“The EIDL program is the only remaining federal solution that can provide critical access to capital for small businesses,” the letter reads.

Restaurants Lobby for Changes to Critical COVID EIDL Program

Chief among them: raising the cap to $2 million per loan.

Restaurants and other businesses in the hospitality industry aren’t out of the woods just yet when it comes to fending off pandemic-related financial woes, according to a letter sent to the U.S. Small Business Administration from The National Restaurant Association and other hospitality groups.

The letter, dated August 24, requests that the SBA make changes to the COVID Economic Injury Disaster Loan program. Specifically, the Association and other groups who signed the letter have requested the cap for EIDL loans be raised to $2 million per loan from the current maximum of $500,000. They have also asked that a rule related to who can access the program be changed to allow “multi-unit small business owners” to have access to the loan program.

“Within the first six months of the outbreak, an estimated 32,700 franchised businesses had closed,” the letter reads, “21,834 businesses were temporarily closed, while 10,875 businesses were permanently closed. The restaurant and foodservice industry is still reeling from $300 billion in lost revenue, which has led to one million lost jobs and 90,000 restaurants closed permanently or long-term … The delta variant has caused new health and economic concerns and small businesses across the country are bracing for a challenging end of the year. Many business owners remain in desperate need of additional liquidity to help ensure their doors remain open.”

Along with stressing the need for additional liquidity, the letter articulated the importance of changing restrictions within the EIDL program, restrictions that limit resources available to multi-unit business owners. The current restrictions, the authors claim, prevent operators from utilizing both the Paycheck Protection Program and EIDL simultaneously. The PPP program waived restrictions related to multi-unit operators.

“The EIDL program is the only remaining federal solution that can provide critical access to capital for small businesses,” the letter reads.

Franchise operators received significantly less funding than their independent counterparts. According to a FOIA analysis of the Restaurant Revitalization Fund, restaurant franchises received less than 10 percent ($2.65 billion) of the total sum distributed through the RRF compared to the almost 90 percent ($25.6 billion) independently operated restaurants took in.

With the Delta variant causing more concern among owners and operators, it’s no surprise that franchise owners are clamoring for more avenues of relief. Of the more than 350,000 restaurants that applied for assistance through the RRF, less than half (100,650) received financial assistance.

Uncertainty surrounding financial assistance coupled with recent survey data collected by the Association explains the push by those in the hospitality industry for extra assistance. According to a recent study conducted by the Association, nearly one in five adults have stopped going out to restaurants. Sixty percent of respondents also acknowledged changing their restaurant habits due to the rise in the delta variant.

"For an industry that requires a 'full house' every evening to make a profit, this is a dangerous trend," said Sean Kennedy, executive vice president of Public Affairs for the National Restaurant Association, in a press release. "These changes indicate declining consumer confidence that will make it more difficult for most restaurant owners to maintain their delicate financial stability."

Kennedy also warned that the rise of coronavirus variants like delta could force more restaurants to shutter permanently.

“The small gains that our industry have made toward financial security are in danger of being wiped out,” Kennedy said, “dashing the hopes of communities, entrepreneurs, and consumers nationwide."

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