Relief programs that funneled cash into businesses in the United States in 2020 weren’t enough to prevent 110,000 restaurants from closing by year’s end, but a new round of funding from the Small Business Administration might help the food and beverage industry see a comeback in 2021.
Sen. John Hickenlooper and Colorado Springs Mayor John Suthers visited Atrevida Beer Company in north Colorado Springs on April 7 (National Beer Day) to explain how local restaurants and breweries might soon be able to qualify for financial assistance from the Restaurant Revitalization Fund.
“The pandemic has been hard for businesses in Colorado Springs and across the state, but especially for restaurants, bars and brewers,” Hickenlooper said. “Dozens of Colorado breweries closed down last year and many more are hurting. The Restaurant Revitalization Fund will help them by providing flexible emergency aid for everything from rent and supplies to the cost of PPE and construction for outdoor seating.”
Colorado’s restaurant industry generates about $14.5 billion in revenue each year, according to the state. It lost roughly $3 billion last year. Around one in three restaurant workers lost their jobs during the pandemic, and the state estimates that 78,000 still haven’t rejoined the workforce. In Colorado Springs, more than 12 restaurants closed last year.
Part of the $1.9 trillion American Rescue Plan Act, the Restaurant Revitalization Fund will distribute $28.6 billion to qualifying food businesses to help prevent even more from folding as the pandemic continues into 2021.
Grants are tax-free and are limited to a maximum of $5 million per restaurant or $10 million per restaurant group. To qualify, business owners will have to show an overall financial loss in 2020. Funding amounts will be calculated by taking the difference between 2019 and 2020 gross revenue and then subtracting any Paycheck Protection Program loans a business may have taken.
A wide range of food and beverage businesses — wineries, caterers, food carts, traditional brick-and-mortar restaurants and more — are eligible to apply.
As of April 12, the SBA had not yet set a firm date for when it will start accepting applications.
Atrevida co-owner and head brewer Jessica Fierro is one of many small business owners anxious for the day when she will be able to get in line.
“I think 2020 was extremely hard for all of us, especially those of us in small business and in the hospitality sector,” Fierro said.
She has operated Atrevida since January 2018 with her husband, Richard. She said they applied for both rounds of PPP funding, but that can only be used to cover expenses like payroll, mortgage interest, rent and utilities. Money from the Restaurant Revitalization Fund can be used for a wider range of business needs, like purchasing food and beverage supplies.
“Businesses have different types of overheads and debts and all that kind of stuff, so for one person this relief fund can mean, ‘I can keep my doors open.’ And for another person this relief can mean, ‘Hey, I can start to operate and build inventory,’” Fierro said. “It doesn’t come with the same restrictions that the PPP loan comes with.”
Randy Price, who co-owns Rocky Mountain Restaurant Group with his wife, Liz, said that while their customers returned when dine-in service reopened last year, finding new employees to fill out staffing at the eight Urban Egg locations they run along the Front Range has continued to be a challenge. Price and his wife also operate Salsa Brava Fresh Mexican Grill in northeast Colorado Springs.
“The problem with everyone in the industry right now is really finding employees,” he said. “We got most of our employees back, but it’s just real hard right now to source additional employees to begin to move toward that reopening with less restrictions. I think everybody’s feeling the same pain. We’re being as creative as possible with referral programs and advertising and getting the word out that we’re looking for the right people to work and grow and continue to move forward.”
Price believes the grants could be crucial for many restaurant owners who made it to 2021 hanging by just a thread.
“It will really help people continue to dig out of the hole they were put in last year,” he said. “They’re not taking applications yet and there’s still some gray area there, but we’re certainly keeping an eye on it and plan to participate in that.”
Mackenzie Tamayo, COVID-19 program manager for the Pikes Peak Small Business Development Center, said business owners might have to be patient for a while longer. She said rolling out large federal grants can be a difficult process.
“The thing we’re always concerned about is giving too much information up front until things have really been solidified,” she said. “For example, the application for the Shuttered Venues Operators Grant was open April 8, and the portal shut down the next day. So we’re just kind of cognizant of the fact that once this gets rolling, there’s going to be a huge learning curve in regards to what’s put on the site and how people apply.”
She said business owners can find more information about the program at sba.gov. Other questions can be answered by contacting Pikes Peak SBDC or the Colorado Springs Chamber & EDC.
Editor's note: This story has been corrected. The Restaurant Revitalization Fund will distribute $28.6 billion to qualifying food businesses, not $28.6 million, as was initially reported. The Business Journal regrets the error.