The flow of Small Business Administration funds has been halted for thousands of restaurant businesses owned by women, socially or economically disadvantaged individuals and veterans because of lawsuits filed by several white business owners.
Restaurants in Texas and Tennessee filed lawsuits against the SBA, arguing that prioritizing the Restaurant Revitalization Fund to groups based on race and gender was unconstitutional. The RRF is aimed at aiding restaurants, an industry decimated by the pandemic.
The SBA opened the fund to the priority groups for the first 21 days of the application window. Prioritizing the applicants was mandated by Congress.
A letter obtained by Nation’s Restaurant News told those applicants awaiting funds:
“The SBA is not able to pay 2,965 priority applicants — including yourself — who were previously approved and notified of their approval.. The SBA will not pay these claims because the legal conclusions in these court rulings would preclude payment. […] SBA’s leadership is frustrated with this outcome and remains committed to doing everything we can to support disadvantaged businesses getting the help they need to recover from this historic pandemic.”
A lawsuit on behalf of the operator of the Lost Cajun restaurant in Texas was filed by America First Legal, a legal group founded by Stephen Miller and Mark Meadows, former aides to President Donald Trump, according to Reuters.
A court in Texas issued a preliminary injunction preventing the SBA from disbursing funds to the priority group.
The Wisconsin Institute for Law and Liberty (WILL) sued on behalf of Antonio Vitolo, the owner of Jake’s Bar and Grill in Harriman, Tennessee, according to the Hill.
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Vitolo, a white male, according to the lawsuit, claims that giving priority to certain groups “puts white male applicants at significant risk that, by the time their applications are processed, the money will be gone.”
Said an SBA spokeswoman: “While we cannot comment on the specifics of the litigation, it is the North Star of the U.S. Small Business Administration to assist underserved small businesses, and we’ll continue to do so. We remain committed to doing everything we can to support disadvantaged businesses in getting the help they need to recover from this historic pandemic and restore livelihoods.”
The fund launched May 3 as part of the American Rescue Plan Act. For the first 21 days, the fund was open for applications from women, individuals economically or socially disadvantaged, and veterans. By May 15, the fund received 147,000 applications from the prioritized group requesting $29 billion in relief funds, according to the SBA.
Since the fund closed on May 24, the SBA received more than 372,000 applications requesting $76 billion in funds — far exceeding available funding. To date, more than 100,000 restaurants have received $27.4 billion in relief funds.
It’s estimated that one in six restaurants across the country permanently closed due to the pandemic. But not everyone was eligible or will receive funds.
Genevieve Vang feels like one of the lucky ones. The owner of Bangkok 96 Street Food inside the Detroit Shipping Co. in Detroit applied for and received funds. Vang says the funds helped her to strategize. .
“Everything is changing and there is so much going on, you need to adapt to change,” she said.
Vang added that it hasn’t been easy and cited the short labor supply for needing to cut back on hours and shifts and days open. The funds, she said, will help her reinvest.
It’s not known how many restaurants in Michigan applied for RRF funding. The SBA has not released any state-by-state statistics. In 2018, Michigan had 16,543 eating and drinking places, according to state data from the National Restaurant Association.
More than 3,000 restaurants in Michigan permanently closed in 2020 due to the pandemic.
There may be hope for those who missed a chance at funding. A bipartisan group of lawmakers, according to the Hill, on June 10 introduced the Restaurant Revitalization Fund Replenishment Act of 2021 to add an additional $60 billion to the fund.
Contact Detroit Free Press food writer Sue Selasky and send food and restaurant news to: 313-222-6872 or firstname.lastname@example.org. Follow @SusanMariecooks on Twitter.
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