The Small Business Administration’s announcement this week that the “Paycheck Protection Program” had exhausted the nearly $350-billion allocated by congress is the latest blow to hit North Texas’ struggling restaurant industry.
“We estimate less than 5% went to the restaurant industry and out of $349-billion to one of nation’s largest, most important sectors that seems like a complete failure,” said Emily Knight, CEO of the Texas Restaurant Association.
Knight said locally-owned restaurants were at an especial disadvantage because of their financial set-up and unique needs given the industries volatility.
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Furthermore, Knight believes programs like the PPP are ill-suited for restaurants given the stipulations for forgiveness - which in the case of the PPP is a mandate that 75% be used for payroll.
“So let’s expand that out, let’s reduce that amount that just has to be on payroll to give these folks a fighting chance,” Knight said.
Dallas restaurant owner Brooks Anderson is among those who has been actively seeking SBA help for weeks and has so far been unable to get any.
“I haven’t checked it(bank account) today because I always find when I check my bank accounts it leads to a bout of depression,” Anderson said with a laugh when asked if he’d yet gotten any SBA funds.
Anderson is the co-owner of multiple Dallas restaurants including the popular Boulevardier in Bishop Arts. He agrees with Knight that the current stipulation surrounding forgivable SBA loans are unrealistic for most restaurants.
“We aren’t going to get it to 75%, so I’m just taking a loan basically,” Anderson said.
Anderson also points out that in addition to rent, utilities and other bills – his state, federal taxes are coming due, which drastically reduces the amount of liquid funds that are vitally necessary in the restaurant industry.
In a press release Friday, the Texas Restaurant Association asked Congress for the following things:
· Immediately fund the PPP loan program
· Revise Loan Restrictions to match Industry Realities:
· Provide Flexibility in Timing for Restaurants to Use PPP Loans
· Exemptions from Loan Forgiveness Reduction:
· Ensure Loan Terms Match Congressional Intent:
· Businesses should be allowed to apply for a PPP loan, get approved for it, and have funds earmarked for them, on a loan that will have an origination/disbursement date into the future (In line with the above on Flexibility of timing to use funds)
· Deferral of Certain Tax Payments to Provide Immediate Liquidity