Times have never been more uncertain for the restaurant, event, hotel, and hospitality industries. With dining rooms closed and people encouraged to stay at home, restaurateurs have found that staying afloat requires a Herculean effort.
Unfortunately, from my position on the periphery of the industry, there isn’t much I can do to help. All I can do is share whatever information I have with anyone who will read it.
So I’ve put together a list of resources to help independent restaurant owners during this crazy time. Some are grant and relief funds and some are discounts that may be helpful. They may not be huge savings on their own, but they could cut down a bit of the pressure while we navigate the current climate.
Please note: I am not an attorney or accountant and I do not intend this to be legal or financial advice. It is for informational purposes only. Please consult with your legal or financial advisors.
Restaurant grants and funds for relief
There have been a lot of acronyms thrown at us over the past few weeks, especially regarding the CARES (Coronavirus Aid, Relief, and Economic Security Act). Since the SBA programs have been in the news more than any other, let’s start with those.
There are four SBA programs that may be available to your restaurant for relief. Their website is a bit of a mess, so I’ve gathered the basic information here in one place.
Economic Injury Disaster Loan (EIDL)
The EIDL has two parts — a loan and an advance.
An Economic Injury Disaster Loan through the SBA is available for up to $2,000,000 with a 3.75% interest rate. The first repayment won’t be due for a year. The EIDL is only available to small businesses that have suffered a negative economic impact. For restaurants, that shouldn’t be hard to prove.
These funds can be used to cover payroll, rent/mortgage, and other debt.
There’s also a $10,000 advance on the loan that you can request from the SBA. The advances are supposed to be issued within just a few days of filing your loan application. And the advance does not have to be repaid, even if you’re not subsequently approved for the loan.
Note: although the SBA website says the advance is $10,000, some further reading shows that applicants are getting up to $10,000, with some smaller companies receiving a smaller advance.
Paycheck Protection Program (PPP)
Note: As of today (4/16/2020), news reports say that the PPP fund has run out of money. Whether the federal government will provide more funding to the program or will create another program for the businesses who were unable to secure aid remains to be seen.
The PPP’s purpose is to incentivize small businesses to keep their workers on the payroll. It provides a forgivable loan to be used for:
- Payroll for U.S. resident employees
- Healthcare premiums
- Mortgage interest (but not premiums)
- Interest on other debt
To be eligible for PPP, your restaurant must have been in operation on February 15, 2020. You must have payroll costs for employees that are U.S. residents, and your business must (in most cases) have fewer than 500 employees.
- all employees remain on your payroll for at least 8 weeks, and
- you keep compensation for employees at the same level, and
- at least 75% of loan proceeds go to payroll costs,
then the PPP loan will be forgiven.
If you are unable to maintain staff and compensation rates, the loan will be subject to 1% interest, with maturity in 2 years.
Note: QuickBooks and Square have been approved to facilitate PPP loans, but their online systems are not up and running as of 4/16/2020.
SBA Express Bridge Loans
SBA Express Bridge Loans haven’t been discussed much in the news, but they could be helpful to a smaller subset of businesses.
Their purpose is to provide a quick cash infusion to those companies that were already participating in the SBA Express program at the time of the Presidential-declared state of emergency.
These loans are available in amounts up to $25,000. The funds must be used to support small business survival during the disaster, or to provide a “bridge” while waiting for EIDL funds. If you get the EIDL, the Bridge Loan will be repaid in part or in full by the EIDL.
For more information about SBA Express Bridge Loans, click here.
To apply, reach out to your SBA Express Lender.
SBA Debt Relief
If you, like so many other small businesses, already have a loan with the SBA, there will be a little help for you on that front. This relief applies to:
- 7(a) loans — used to buy a business or get working capital
- 504 loans — commercial real estate funding
- Microloans — up to $50,000 of working capital
If you have one of these loans through the SBA, the SBA will pay the principal, interest, and fees for 6 months. And if you get one of these loans before September 27, 2020, you will receive the same 6 months of relief.
This relief should be automatic, with no applications necessary.
For more information about SBA Debt Relief, click here.
To discuss your current SBA loan, contact your Loan Servicing Office.
Other types of relief
There are additional grant and loan programs for restaurants and other small businesses, outside of the Federal government and the SBA. They provide less funding, but they may be able help you cover some bills until you can reopen your doors.
James Beard Foundation — Food and Beverage relief fund. Pellegrino donated $1,000,000 and Patrón donated $425,000 to the fund. I love my Topo Chico, but I may need to cheat on them with Pellegrino for a while as a thank you.
Note: High demand has led the JBF Fund to suspend taking applications. They will make an announcement when they reopen applications. Check their website for updates.
Restaurant Workers’ Community Foundation — Relief for restaurant workers. RWCF is in the process of developing a program for 0% interest loans for small businesses. Sign up for their newsletter to stay up to date on their progress.
Facebook Small Business Grants — Facebook has earmarked $100 million for cash grants to help small businesses. To be eligible, you must have between 2 and 50 employees, have been in business for at least a year, and have suffered loss due to COVID-19.
For more information, click here.
GoFundMe’s Small Business Relief Fund — GoFundMe has started a matching program for small business relief. Businesses must establish their own support fundraisers. If they are able to raise $500 and meet GoFundMe’s requirements, they will be eligible for a $500 matching grant.
None of these deals on their own will moves the needle from danger to security. But anything restaurants can do to save a few bucks has to be worth a try, right?
Credit Card Relief
Some credit card companies are waiving interest and fees, which could be a big help if you carry a high balance month to month. American Express is showing that they’ll work with some cardholders, so call them if you’re a customer.
Chase has an online form where you can request payment assistance. Or you can call the number on the back of your card. And Citi is waiving minimum payments due and late fees for 2 payment cycles. Whoever your credit card company is, reach out to see if they’ll work with you on payments and late fees.
Are you still paying full price for premiums on a closed restaurant? Your circumstances have changed dramatically, so you shouldn’t be paying the same amount for an empty building.
For example, can you stop paying your liquor liability insurance if you’re closed or only serving food to go without alcohol? Can you get your workman’s comp premiums reduced if you’ve had to cut back your workforce? Call your insurance agent to see what they can do for you until things get back to normal.
Reduced Food Delivery Rates
Some food delivery services haven’t been very accommodating of their restaurant partners. One is only deferring restaurant commissions, and another is reducing customer delivery fees but not restaurant fees. I won’t name them, but they know who they are.
But DoorDash and Caviar are reducing restaurant commission fees by 50% during the crisis, which is pretty decent of them. If you’re currently signed up with multiple third-party delivery services, this may be a good time to focus more attention on DoorDash so you can keep more of your hard-earned dough.
Subscriptions and Plans
Individuals are often told to check their bank accounts for monthly subscription fees that they may no longer need. Have you done the same for your business?
Are there apps or services that you use during the normal course of business, but won’t need for the next couple of months? Or can you ask the provider for a discount?
For example, many restaurants use Adobe Creative Cloud for graphics and design work. Some existing users have had recent success getting two months free. After you log in, click “Plans.” Then click cancel your subscription. Before you finish the process, click the “Offers” link and you may find a discount for two months of free service.
Do you have a complex phone system with multiple lines? Is it possible to deactivate the extra lines temporarily, just keeping the main phone on and reducing your bill?
$50 here, $100 there. Any cut in expenses can only help.
Ad Credit Discounts
If you’re trying to push your takeout food, it might be a good idea to do some online advertising. Google Adwords is providing a $150 match on advertising spend right now.
Yelp is also offering $100 in free search advertising to restaurants that offer delivery or takeout.
It’s not a lot, but it may get a few extra customers to place a to go order.
Are there other tricks you’ve used to cut expenses at your restaurant or find some extra funding? Please share!