President Trump’s administration is pushing for an additional $250 billion in loans for small businesses as part of a new round of fiscal stimulus, but some restaurant owners fear the money will be too little, too late.
With Treasury Secretary Mnuchin pushing Congress to approve the additional funds by Friday, hard-hit restauranteurs warn that the money is unlikely to fill the nearly $1 trillion void left by multiple establishments shuttering their doors across the country.
“It won’t make enough of a difference,” Kwame Onwuachi, founding member of the Independent Restaurant Coalition, which represents over 500,000 restaurants, told Yahoo Finance on Wednesday. “That’s what we’re trying to fight for.”
The IRC was formed out of a sense of urgency to save the restaurant industry. A letter the group sent to House Speaker Pelosi, Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer and House Minority Leader Kevin McCarthy on Monday got 18,000 signatures.
Many restaurant owners fear that when the U.S. economy re-opens, their financial losses will continue to mount as people will still be reluctant to gather in crowded rooms in the absence of a cure for the coronavirus.
Financial relief from Congress doesn’t currently account for that scenario, the IRC points out. The group is also asking Congress for tax rebates, and a requirement that business interruption insurance be extended to cover the coronavirus pandemic.
“We are looking to extend the maximum loan to three months after we are allowed to reopen, because after the eight-week clock runs out, independent restaurants will still be closed,” explained Onwuachi, who had to let go of his entire staff of 60 people at his D.C.-based Kith/Kin restaurant.
“We will be forced to lay off our staff again,” he added.
The current $2 trillion fiscal stimulus package sets aside $349 billion for small businesses. The funds are meant to cover an eight-week period of payroll costs, rent, utilities and mortgage payments for businesses. Businesses that use the loans to retain workers on their payroll will get the full amount of their loans forgiven.
The rollout of the paycheck protection program (PPP) for small businesses has been uneven at best and chaotic at worst. White House economic adviser Larry Kudlow stated that 178,000 loans amounting to $50 billion had been approved on Tuesday, but many small businesses have faced hurdles in securing those funds.
“It’s the small little mom and pop-owned restaurants that may not have all of their finances in order [which] is needed to apply for these loans,” Onwuachi told Yahoo Finance.
“These are restaurants that feed America. These are restaurants that America goes to eat on a daily basis, not just a special occasion place,” he said, urging that those establishments be represented in the next round of fiscal stimulus.
The race factor
Located in the nation’s capital, Onwuachi’s Afro-Caribbean themed Kith/Kin prided itself on being a highly sought-out establishment where tables were booked months in advance.
Onwuachi and servers greeted patrons by saying “Welcome Home” evoking feelings of family and tradition for patrons. The menu is a depiction of Onwuachi’s Trinidadian, Jamaican, Nigerian, and Creole family heritage.
Closing the restaurant because the coronavirus was crushing for Onwuachi, he said. “My restaurant is still in the process of applying [for the Paycheck Protection Program loans]. There’s a lot of paperwork that has to be accrued. That’s the scary part for me,” he said.
Ethnic disparities have also surfaced in the pandemic, with predominantly black communities being hit hard by the virus.
Anthony Fauci, the public health official spearheading the U.S.’s response to the pandemic, said on Tuesday that “underlying medical conditions” such as diabetes, hypertension, obesity and other factors were worsening the virus’ impact on black communities.
“It’s tough enough for minorities or marginalized people to make it in this industry as is [then] you throw in a pandemic. We’re all in this together, there’s no doubt about that, Onwuachi told Yahoo Finance. “But 70% of the people in Chicago that have perished have been African-American.”
Representation of minority business owners in the industry is taking a hit, says Onwuachi. “I want to make sure we’re thinking about these things. It’s showing the kinks in our armor, the vulnerable. I’m hoping that we can step up and do something about it,” he said.
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