These restaurants were approved for federal aid. White restaurateurs hijacked it.

When Ruth Grasser heard about the Restaurant Revitalization Fund’s grant for restaurants affected by the pandemic, she made sure to get her paperwork done as soon as possible. “We were ready,” she said. “On May 3, we submitted an application 10 minutes after noon, and the portal opened at noon.” Grasser, owner of the Washington DC-based Pizzeria Paradiso chain, bought a . applied for the grant was relieved When his application was approved a few weeks later.

Grasser had big plans for grant money: She was going to pay the rent, and set aside some money for maintenance costs. Most importantly, she was going to use it to hire more employees.

“Last March, my staff of 170 was reduced to 20 people. Over the years of the pandemic, we’ve grown to about 70, but to operate our restaurants at 100 percent – I have four locations, and we started the pandemic with five – I have to hire a lot of people. . ,” Greser said. She declined to share the total amount of funding she had been awarded, but said it would be up to her to resume full operations at all four remaining Pizzeria Paradiso locations and recover them “in the next year or so.” through” would be enough.

The money never came. Gresser is one of more than 2,900 restaurant owners nationwide who can no longer receive the grant money they were promised by the Small Business Administration, thanks to some lawsuits that claimed the money — which Preferred women, people of color, and other small-business owners who generally do not have access to capital or are historically marginalized – were discriminatory… against white people.

From the start, it was clear that there would not be enough money to go around. Congress set aside $28.6 billion Restaurant Revitalization Fund As part of the 2021 US rescue plan passed in March. The bill requires the Small Business Administration to prioritize applications filed by businesses that are at least 51 percent owned by women, veterans, and people who “socially or financially deprived”—meaning people of color and people whose net worth is less than a certain net worth—for 21 days. After the three-week period has passed, the SBA can begin processing applications and distributing funds to all other businesses.

On May 18, just two weeks after the application portal opens, the SBA announced That it has received 303,000 applications so far — 57 percent of which were filed by “women, veterans, and socially and economically disadvantaged business owners” — adding up to more than $69 billion in requests. By that time, the agency had approved “approximately 38,000 applicants … for more than $6 billion,” the release read. These initial recipients were all in the priority category.

Three days after that press release was published, a pair of restaurant owners sued the SBA, claiming that prioritizing businesses owned by people from socially and economically disadvantaged groups was discriminatory against white people. . And on May 28, a federal judge in Texas issued an injunction preventing the SBA from distributing dues to applicants in the priority category who were approved for their grants but had not yet received the money. . Greser was one of them. The injunction meant that the SBA, however, could begin distributing money to non-priority applicants.

Right-wing advocacy group America First Legal – founded by former Trump adviser Stephen Miller and Trump White House chief of staff Mark Meadows – filed suit on behalf of white restaurant owners in Texas and Pennsylvania. The owners of the Penn Hotel Sports & Raw Bar in Hershey, Pennsylvania, and Lost Cajun in Keller, Texas, are being subjected to unconstitutional race and sex discrimination by “preferences” that the law mandates for minority- and women. businesses,” the lawsuit alleges. The Wisconsin Institute for Law and Liberty, another conservative advocacy group, filed a separate lawsuit On behalf of the owner of Jake’s Bar & Grill, a restaurant in Harriman, Tennessee.

Neither Janice and Jason Smith, owners of Lost Cajun, nor Eric Nieman, owner of Penn Hotel Sports & Raw Bar, qualify as socially or economically disadvantaged. (It’s not clear what percentage of Lost Cajun is owned by Janice Smith; if the restaurant was at least 51 percent female-owned, it could apply as a priority candidate.) Nyaman said on May 3. Approximately $640,400 in funding was applied for the day the applications were opened. Smith applied for approximately $187,700 on May 5. Thus, the lawsuit alleges, it is possible that “the entire $28.6 billion Congress allocated to the Restaurant Revitalization Fund will be eliminated” before Nieman and Smith “can even be considered for the relief program.” (The grant amount for each restaurant is calculated based on previous years’ income and expenses.)

In form of new York Times Reported, Lost Cajun, Penn Hotel Sports & Raw Bar, and Jake’s Bar & Grill all received grant money despite being non-priority applicants. They received their awards on June 1, when a Texas judge issued an injunction preventing the SBA from distributing the funds owed to businesses in the priority category. And although the America First Legal lawsuit claims that the SBA’s priority term is a form of “race or gender discrimination,” the government’s definition of “socially and economically disadvantaged groups” is not limited to race or gender.

Bob Freeman, owner of the historic Buena Vista Cafe in San Francisco, applied for a priority grant as a veteran. His grant was approved on May 28—the same day the Texas injunction was issued—though he declined to say how much the total funding would be. On June 12, Freeman received an email saying he would no longer receive the funds.

“The SBA is not able to pay 2,965 priority applicants — including you — who were previously approved and notified of their approval. The SBA will not pay these claims because these court decisions are legal. The conclusion will stop payments,” the email read. “The leadership of the SBA is disappointed by this outcome and is committed to doing everything we can to support disadvantaged businesses receiving the help they need to recover from this historic pandemic.”

“We could have been in the other group, except for the fact that both my [business] Partner and I are veterans. He was an Army officer, I was a Navy officer,” Freeman said. “I spent three years, four months, 29 days and some odd hours in the Navy, and I’m being punished for that.”

But it is not clear whether it would be beneficial to apply as a non-priority candidate. The SBA has awarded grants to over 100,000 restaurants to date. Of them, around 72,000 were in the priority category, according to new York Times. Priority applicants have received about $18 billion of the $27.5 billion distributed by the SBA — meaning it’s entirely possible that the funding may have run out before the priority period ends. In an emailed statement, an SBA spokesperson said many restaurants in both categories would not be able to receive grants due to budget constraints.

Greg Lyons, owner of Amelinda in Milwaukee (who also spoke to her) times), hoping to use the money to expand the restaurant’s hours, expand the restaurant’s bar, upgrade its ventilation system, and – most importantly – hire more employees and increase existing staff. was.

“Although all restrictions have been lifted in Milwaukee, we are still operating at 50 percent because we need to bring in more employees,” Lyons told Eater. “To bring in more guests, we need more staff, but we cannot afford to bring in more employees without earning more money. That’s why we are caught in this vicious circle.”

On June 22, Leon received an email from the SBA mentioning his status as a priority applicant. “[D]Due to recent court rulings, the SBA will not be able to distribute their grants,” the email read. But the Texas judge’s injunction requires the SBA to process applications and distribute the grants to them. No in priority category. Given the total number of applicants in both categories and the relatively small size of the fund, there is no way everyone who would qualify for the grant would get it. “If Congress provides the SBA with additional funding for the Restaurant Revitalization Fund,” Lyon’s notice read, “the SBA will be able to process received orders and fund approved applications until the additional funding is exhausted.”

Whether Leon and the more than 2,950 others whose grants were rescinded receive funding is ultimately up to Congress. a Bipartisan bill introduced earlier this month will add $60 billion to the fund; If lawmakers agree on a bill that provides enough money for restaurants eligible for grants, but they never received the money, the lawsuits would be controversial. But if Congress doesn’t pass a second round of funding, restaurant owners in the priority category whose grants were approved but never distributed will only receive funding if the revitalization fund is somehow out of the money. Does not exit – that is already.

In an emailed statement, the SBA said it will “continue to work round-the-clock to get the country’s restaurants, venues and other small businesses back on track.” Per the counter, the agency is also urging Congress to give more money to the Restaurant Revitalization Fund.

D.C. Pizzeria’s owner, Gresser, is hoping that the second round of funding will mean there’s finally enough money to go around. “This program has been hindered from the start because it did not address the true size of the need it was designed to improve. Instead, the law established a false deficiency by funding the program. [one-third] of recognized, anticipated need,” she said. “Of course Congress can solve this by passing the replenishment bill. My personal story is important but the bigger story is that because of the way the program was funded, the full scope of the economic impact of the pandemic is not being taken into account. “

Like other restaurant owners across the country, Leon Have had trouble hiring more employees As everyone scrambles to reopen one at a time. He planned to use some of the $285,000 he was given to raise salaries at the restaurant to make recruiting more competitive. Now that they have been denied funding, Leon said, it will have an impact on the entire community.

“It’s not money that’s going into my pocket,” he said. “It’s money that’s going into the business. And it’s not only going to my business, but it’s going to all the local farmers we work with, the fishermen, the butchers and the growers. The less I The sales I make, the less tax revenue that cities and counties and states make. If I hire more people, it’s more payroll taxes, it’s more Medicare and Social Security that we’re paying.

Gabby Del Valle is a freelance reporter who primarily covers immigration and labor.

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