On July 14, the Journal released the list of recipients in Guam and the Northern Mariana Islands of Restaurant Revitalization Fund grants from the U.S. Small Business Administration. (See: https://www.mbjguam.com/2021/07/14/sba-restaurant-revitalization-fund-recipients-in-guam-and-the-nmi/)
The Journal immediately received questions from readers on how the selection was made for which companies received funding in Guam and the NMI.
The RRF was designed not only for restaurants, but also was applicable for other “food-service” businesses, such as food stands, food trucks, food carts, caterers, bars, lounges, snack and nonalcoholic beverage bars, bakeries, brewpubs, taprooms, wineries, distilleries, breweries, inns and hotels, and many others.
The RRF was designed to help those businesses who grossed less in 2020 than in 20019. During the application process, applicants could take the gross receipts amount from their 2019 federal tax return and subtract the gross receipt amount from their 2020 return.
From that number, the applicant then subtracted the disbursement amounts of any PPP loan, whether first draw or second, or both. If any amount of PPP dollars was repaid, there was no need to subtract it.
The number left was what a restaurant was eligible to receive from the RRF.
Up to $5 million per location was up for grabs for those restaurants that applied, not to exceed $10 million for a single applicant or multi-location business.
Award amounts of less than $1,000 would not be given out, according to the SBA’s Restaurant Revitalization Funding Program guide. If an applicant had a $2,000 reduction of revenue, but received $1,500 in a Paycheck Protection Program loan, the application would not be approved since the award would be $500. The program was aimed at helping those restaurants most negatively impacted by the pandemic.
As of June 30, more than 278,000 eligible applications representing more than $72.2 billion in requested funds had been submitted for the RRF program. Of those, 101,000 applicants had their funding approved (about 36%). On July 2, the SBA announced closure of the program.
The awarding of funding has been controversial.
For the island of Guam, 79 applicants received a total of $15,202,984 funding, though 287 applied; that’s 14.6% of island businesses that actually received the grant.
In total, for all RRF applications, 39% of all applicants were funded, leaving $43.6 billion in applications remain unfunded and unapproved.
Several Guam businesses told the Journal they were standing by to file early on, ready for the moment the application process opened, but Guam is the fourth lowest regional location in terms of awards. It sat just above the U.S. Virgin Islands, which received $5,985,146, the Northern Mariana Islands, which received $1,891,665 and American Samoa, which received $23,657, according to the SBA’s RRF report.
There were also priority groups for the funding. Women-owned and veteran-owned businesses, as well as “socially and economically disadvantaged small businesses” were given first review, with $5 billion reserved for businesses with less than $500,000 in annual revenue.
Any one of the following could disqualify an establishment or provider: owning or operating more than 20 locations, regardless of whether those locations do business under the same or multiple names; receiving a Shuttered Venues Operations Grant or having a pending SVOG application; being a publicly traded corporation or one majority owned and controlled by a publicly traded corporation; not having a valid business tax identification number; being a state- or local government-owned or operated business; being permanently closed or a non-profit; filing for bankruptcy under Chapter 7 or liquidating under Chapter 11; and filing for bankruptcy under Chapter 11, 12, or 13 but without an approved plan for reorganization.
The breakdown of each recipient and the amount they received was first brought to light through a Freedom of Information Act request from the Independent Restaurant Coalition in June. The goal of the request was to release more information on what happened with the RRF, after a number of issues arose including the filing of lawsuits and the rescinding of funds.
Following the Journal’s July 14 RRF story, the Guam Hotel & Restaurant Association asked businesses to join a letter-writing campaign supporting the replenishment of the fund.
GHRA supported a campaign during the initial RRF applications as well.
“In each instance, GHRA has encouraged members to join the letter-writing campaign to petition in support of the Restaurant Revitalization Fund,” said Mary P. Rhodes, president of GHRA. “This time we sent it to everybody, not just hotels and restaurants.”
She said the initial RRF had disadvantages.
“It was a first-come first-serve program only, there wasn’t any money set aside,” Rhodes said. “Maybe when the replenishment happens, it would be good to either fund all of the applicants that applied or consider set-asides for each market that is fair and equitable in percentage to other markets.”
Two bills in Congress may yet ensure grants reach other recipients.
On July 20, a Missouri delegate to Congress introduced H.R. 4568, the Entrepreneurs Need Timely Replenishment for Eating Establishments (or ENTRÉE) Act. The new act would insert $60 billion in additional funding into the RRF, which would come from rescinding money from unspent Economic Injury Disaster Loans and other state and local funds within the American Rescue Plan. ENTRÉE would also take away the priority groups the original RRF granted. That bill is pending.
H.R. 3807 was introduced on June 11, to amend the American Rescue Plan Act of 2021 and to increase appropriations to the Restaurant Revitalization Fund.
There is currently no indication as to which initiative or if both will move forward. mbj