Federal Relief Aid a necessity for small restaurants and businesses

In the wake of the Covid-19 pandemic, several businesses were forced to shut their doors or cut hours in an effort to slow the spread of the novel coronavirus. As a result, many businesses shut down permanently, while others changed to accommodate new restrictions. Restaurants in particular have been hit the hardest.

A poll conducted by the Ohio Restaurant Association (ORA) from July 29 through August 4 found that while more than 75% of Ohio restaurants have reopened, most of them are operating at 50% or less of their normal capacity. Should this persist, more than 50% of restaurants expect forced closure within nine months.

“80% of restaurants don’t think they are going to break even in 2020,” said Homa Moheimani, spokesperson for ORA. “Restaurants have an incredibly small profit margin, and because of all the things that have happened this year, they’re not going to break even, which means they’re not going to make money.”

The organization, which provides various educational and economic resources for restaurant owners and other members of the food industry, have been trying to support restaurants and employees throughout the pandemic. A lack of relief funds for small businesses has contributed to the economic crisis.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by President Trump on March 27. The CARES Act introduced the Paycheck Protection Program (PPP), which provides economic relief to businesses impacted by COVID-19. The program is handled by the U.S. Small Business Administration (SBA).

Employers were eligible for the program if they were operating on February 15 with 500 or fewer employees primarily located in the United States. Self-employed contractors were also eligible for a loan if they were operating on February 15.

The River Merchant, which opened to the public on March 10, did not qualify for emergency assistance from the government. Cameron Thomas, owner of The River Merchant, said the business was too new at the time.

“We applied for the PPP loans, for the emergency disaster, [and] a number of different grants and things of that nature through the SBA,” said Thomas. “And because we didn’t have previous-year tax returns and payroll numbers, we really didn’t qualify for anything.”

Thomas said the lack of government financial assistance made it difficult to keep employees hired, leading to almost the entire staff being laid off before the business was even a week into operation.

“We had 30 people that we brought on for the opening, and then we had to immediately lay off a lot of them, which made things tricky with unemployment. I couldn’t keep anybody on except for a chef and a couple part-time people to keep the lights on. That’s how we had to go for a couple months,” Thomas said.

Thomas said they were “aggressive” in reopening The River Merchant. Ohio Governor Mike DeWine’s initiative to reopen dining services initially blindsided the establishment, which had only been servicing carry-out orders. With support from the community, they were able to continue operations despite the cost of protective equipment.

ORA has supported legislation such as H.B. 669, the Business Expansion and Safety Act, which would allow businesses such as restaurants and wineries to sell carry-out alcohol. The organization has also pledged support for a second round of PPP loans.

PPP applications are no longer being accepted, as the program ended on August 8. The House passed the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES) back in May, which would expand PPP loans, while Senate has been unable to compromise on a relief bill, leaving most businesses and employees on their own.

The Senate’s latest proposal, which would have halved the $600 unemployment addition to $300, failed to secure the 60 required votes to progress in the Senate. In a 52-47 vote, all Senate Democrats opposed the bill.

Wendy Patton, Senior Project Director at Policy Matters Ohio, said the bill introduced in the Senate by Mitch McConnell failed to address the needs of struggling families and unemployed workers.

“It repurposed funds that had not been spent in the Paycheck Protection Program,” Patton said. “The skinny bill was ultimately $300 billion in new dollars. There’s been no meaningful action in the Senate to address businesses on Main Street.”

Patton said the $600 provided by the federal government through unemployment was linked to median household income across the country, and that cutting the weekly payment to $300 when most people rely on it was a crisis waiting to unfold by winter.

“It’s just a cut. It’s not pegged to anything,” Patton said. “They didn’t think, ‘What do people need to survive?’”

Thomas said any future legislation regarding small businesses should work on a case-by-case basis rather than trying to fit one legislation to all small businesses in the country. He said other business owners he has been in contact with have had similar problems with the way Congress has handled their response.

“These bills are more structured for smaller multi-units or more corporate operations. [They follow a] ‘one size fits all’ approach in a way that’s not really benefiting a majority of the small operators,” Thomas said.