SBA Closes Restaurant Revitalization Fund

Photo by Christen McCurdy
Elise Schumock, owner of the Rose City Book Pub, prepares for a hybrid trivia night at her business July 7.

Restaurateurs who missed out on this round of funding — or had it pulled due to a lawsuit alleging discrimination — are in a holding pattern until Congress votes on more funding.

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The Small Business Administration closed the Restaurant Revitalization Fund (RRF) June 30, leaving in the lurch restaurant owners who didn’t get funding they asked for, unless Congress appropriates more COVID-19 relief money for restaurants.

They include 2,965 restaurateurs whose applications were prioritized because their businesses were owned and controlled by “women, veterans, and socially and economically disadvantaged individuals” — who lost funding due to court rulings saying that prioritizing those applications amounted to discrimination.

“Being told I had the money and having it taken away was the worst. I really lost it,” says Elise Schumock, who owns Portland’s Rose City Book Pub and applied for relief during the fund’s priority application window.

Schumock was notified May 28 that she would be receiving funds through the SBA’s program; on June 12, she received an email from the SBA saying recent court rulings “preclude payment” of funding to priority recipients, of which she was one.

Late on the night of June 30, Schumock received another piece of discouraging news: The SBA has depleted the $28.6 billion it received through the fund and is closing it.

book pub 1The Rose City Book Pub was one of about 3,000 businesses that were promised COVID-19 funding by the Small Business Administration but lost it after a court ruling.  
Credit: Christen McCurdy

According to Sean Wilson, a spokesperson for the SBA’s Portland office, says applicants who didn’t receive funding through the RRF this spring “will have their applications held within the application platform to allow for processing in the order received if additional funds are provided by Congress.”

The SBA says it received more than 370,000 applications from restaurant owners across the United States and provided funding to more than 105,000 restaurants — representing $28.6 billion through funding approved by Congress this spring. Of those, 3,777 were small restaurants with gross receipts of less than $50,000 in 2019.

Rep. Earl Blumenauer, who has championed the bill, says the priority application period was created to ensure people who really needed the money would get it — as opposed to what happened with the Paycheck Protection Program. (A December 2020 analysis by American City Business Journals found that businesses in Black or Hispanic neighborhoods were less likely to receive funding than those in white neighborhoods.)

The decision to prioritize certain applicants sparked lawsuits from business owners in Texas and Tennessee, all funded by the America First Foundation, led by Stephen Miller, who advised former President Donald Trump.

One of those business owners, Phil Greer, who owns Greer’s Ranch Café in Texas, told The Counter he found out about the lawsuit through local officials who patronized the restaurant — but that it was never his intent to deny anyone else relief. And in fact, six days after filing the lawsuit, he canceled his case.

“My intention was not to make other categories suffer,” he said, referring to priority groups. “I didn’t intend for anyone to stop receiving funds. The goal was not to do harm.” 

But courts ultimately sided with the plaintiffs, who went forward with their lawsuits. And for business owners who thought they would be getting aid through the RRF and who had it pulled, it does hurt.

“When I first heard, I took three days off. I was howling. There were animal noises coming out of my body. My mom came and took care of me,” Schumock says.

Schumock grew up in Portland but taught Latin in Southern California for 17 years before moving back to Portland in order to start the Rose City Book Pub. Before COVID-19 hit, she says, she routinely did $1,000 in business per day. In March 2020, she made $1,000 over the course of the entire month.

The business has remained open to the extent that it can at any given time, but she has laid off multiple staff members. Before the pandemic hit, she had 10 employees; now she has three very part-time employees and one she calls for backup.

“The two hard times in this were when I was told that I had to shut down and I had to lay off all my employees, and then [when] they took the money back,” Schumock says.

Cathy Teal, who owns Brew Coffee and Tap House in Independence and West Salem, says that instead of denying her application, the SBA should have put her back in the general population pool.

“Why didn’t they just put me back in that pile? Instead we’re back in a holding pattern while those funds are being depleted,” Teal says.

Blumenauer agrees.

“Inexplicably, there’s an interpretation that they should go to the end of the line,” he says. “I hope that this order is appealed because I think it’s wrong.”

So far the SBA has been mum on whether it will appeal the court rulings, with the SBA’s Wilson saying he can’t comment on litigation.

Both Teal and Schumock note that they have received other forms of federal and local assistance; in March Teal talked to Oregon Business about the arduous process of applying for PPP protection. But they’re still struggling to keep their businesses afloat.

“Restaurants were one of the hardest-hit industries over the past 16 months, so it’s not like we can flip a switch and have everything go back to the way it was pre-pandemic,” says Greg Astley, director of government affairs for the Oregon Restaurant and Lodging Association.

Blumenauer is asking for another $60 billion for restaurants, and so far says he has strong bipartisan support.

“We hope to move on this by the end of [July],” he says.

Supporters of the Rose City Book Pub have started a GoFundMe, which, as of Thursday afternoon has raised a little more than $10,000 of a $50,000 goal. Teal says while business at her Brew locations has slowly picked up due to outdoor live music and events, it’s still slow, and that grant writing has become “a full-time job.”

Schumock says she’s not optimistic the new tranche of restaurant funding will pass, and Teal says she feels like she and her husband have been “left in the dark.”
“We’re stuck in a holding pattern for unknown time, really for unknown reasons,” Teal says.

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