Diners on Main Street in Patchogue on May 1.

Diners on Main Street in Patchogue on May 1. Credit: Newsday/Steve Pfost

After nearly 3,000 minority- and women-owned restaurants were told their COVID-19 relief grants were rescinded because of a federal court ruling, a bipartisan group in Congress is seeking $60 billion to help the affected eateries and others.

The minority- and women-owned restaurants, along with those owned by veterans or located in poor neighborhoods, were given priority for Restaurant Revitalization Fund, or RRF, grants when the program was established in March by Congress and President Joe Biden.

What to know

  • Nearly 3,000 minority- and women-owned eateries had their COVID relief grants voided because of a federal court ruling.
  • The court said it was "discriminatory" to give priority to applications from women, minorities and veterans for the Restaurant Revitalization Fund.
  • Federal lawmakers have introduced legislation to add $60 billion so grants can be made to the priority groups and others.

But the RRF, with about $29 billion in initial funding, was oversubscribed in its first two weeks. Applications from the priority groups totaled more than the available funds.

In May, two white-owned restaurants in Tennessee and Texas filed lawsuits challenging the prioritization system, calling it discriminatory.

The federal Circuit Court of Appeals in Cincinnati agreed on May 27. Two of the three judges accused the U.S. Small Business Administration, which oversees the RRF, of "racial gerrymandering" and using "unconstitutional criteria" to award grants.

SBA responded by canceling the grants that had been approved but not funded. The remaining money in the RRF now will likely go to white-owned restaurants.

"While it appears that our work to prioritize restaurants most in need was successful in the first round, the extraordinary demand for the RRF shows that many more businesses still desperately need help," said Rep. Earl Blumenauer (D-Oregon), the leader of the bipartisan group that's called for more money for the program.

A dozen senators and 150 House members are sponsoring the legislation to add money to the RRF, including Reps. Thomas Suozzi (D-Glen Cove) and Gregory Meeks (D-St. Albans).

Suozzi said on Monday, "Thousands of restaurants and catering halls are still facing financial woes due to the effects of the pandemic...It's clear Congress must replenish and better fund this critical relief program."

Sen. Chuck Schumer (D-New York), the majority leader, agreed, saying he will work "just as hard to deliver a second round of relief" as he did in March for the RRF's first funding round.

"Putting a fork in the coronavirus pandemic, and getting our economy back to full speed, means continuing to support the businesses that house most of the forks — our restaurants," Schumer said on Tuesday.

More than 362,000 restaurants have applied for the RRF, with grant requests totaling over $75 billion, according to the National Restaurant Association, a trade group in Washington.

The RRF provides up to $10 million per business to make up for revenue losses during the pandemic. For businesses with multiple locations, the grant is up to $5 million per location.

The funds may be used to pay employee wages, mortgage and rent payments, utility bills, outstanding debts, construction of outdoor seating and other operating expenses. The money must be used by March 11, 2023.

SBA hasn’t publicly disclosed the names of the RRF applicants whose grant approvals were rescinded.

Sean Kennedy, a spokesman for the restaurant association, said, "The announcement that their grants will be awarded to others has left [women and minority restaurateurs] confused, frustrated and afraid they will have to close their doors for good."

The pandemic's impact on all types of minority-owned businesses was more severe. For example, Black-owned firms in New York State closed at nearly three times the rate of white-owned firms last year, according to an August report by the Federal Reserve Bank of New York.

The restaurant association called on SBA administrator Isabella Casillas Guzman to use money from the agency’s other COVID-relief programs to "fulfill your prior commitments to [minority- and women-owned eateries]."

SBA spokesman Matt Coleman said, "As per long-standing agency policy spanning multiple administrations, the SBA does not comment on pending legislation."

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