Bill that would fill Restaurant Revitalization Fund with $40 billion failed to pass the Senate on Thursday, dealing what could be a fatal blow for some people struggling restaurants that did not receive grants from the program.

The vote on the Small Business COVID Relief Act of 2022 (S. 4008) secured a bipartisan majority in favor of passing the bill at 52 votes to 43 against, but the legislation needed 60 votes to pass.

“While there are valid questions about government spending and inflation, restaurants shouldn’t be caught in the crossfire,” said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association, in a statement.

The House on April 7 passed the Relief for Hard-Hit Restaurants and Other Small Businesses Act of 2022 (HR 3807), which would fill the $42 billion RRF. In the end, the political parties couldn’t agree on how to pay for a refill of the RRF – Democrats wanted a replenishment of the RRF to act as an emergency expense, while Republicans “wanted usually that existing funds be reallocated,” according to the NRA.

Rep. Dean Phillips (D-Minn.) warned that the Senate had “not been in favor” of this legislation last month during a call with the Independent Restaurant Coalition, but the coalition has pledged to stay “extremely optimistic”.

“I think of the thousands and thousands of restaurant owners across this country, both Democrats and Republicans. Because it’s not just a blue thing – it’s a blue and red thing,” Greg Leon said. , chef and owner of Spanish and Portuguese resto Amilinda in Milwaukee. “And I don’t understand why our elected officials wouldn’t want to do something to help their constituents. That’s beyond me.”

The fund has been closed since May 2021, when it depleted its $28.6 billion just three weeks after opening. This rapid depletion excluded nearly 200,000 restaurant applicants from the grants. More than half of the independent restaurants and bars represented in this pool expect they will close within six months without RRF subsidies, according to an April survey by the IRC. Only about 100,000 restaurants received grant funding.

Erika Polmar, executive director of the IRC, fears the incomplete completion of the fund has done more harm than good to a pandemic-battered restaurant industry.

“It created a tougher competitive market between those who received and those who didn’t,” Polmar said. “Now you have this level of competition where the restaurant across the street that received the Restaurant Revitalization Fund [grant] may pay higher wages than the person who did not receive the RRF. So it’s kind of an additional insult to the insult.”

Leon agreed. He was one of nearly 3,000 restaurateurs whose grants were canceled after a lawsuit was filed against the Small Business Administration, arguing that the RRF’s priority period for minorities and socially and socially responsible operators economically disadvantaged was unconstitutional.

“Now, not only are we competing with restaurants that are ahead of us. We’re competing with restaurants that have gotten the RRF. And we’re competing with restaurants that can afford to pay 25 $ to $30 an hour and that’s how they can get staff. That’s who we’re competing against,” Leon said. “And it’s hard to know how you can tell someone to work for me, but all I can pay you right now is 15 bucks. And they’re like, ‘Well, why would I want to come with work for you when the restaurant down the street can pay me $20?'”

Lawmakers and operators hoped a refill of the fund, which the House approved in early April, would level the playing field for restaurants across the country and be a lifeline for restaurants struggling with mounting debt. wage inflation and a persistent labor shortage. That debt burden snowballed as restaurants adopted the Paycheck Protection Program and economic disaster loans as a band-aid in place of RRF grants, Polmar said.

“Now we see things like unforgivable PPP expenses, added to this EIDL loan debt because the government said, ‘You didn’t get RRF, but we still got EIDL,’” Polmar said. “It’s a low-interest loan, but it’s a loan, and those payments are coming due. It’s like compounding the grief. One layer on top of the other.

DoorDash, ChowNow, Toast, the James Beard Foundation and 26 other associations, brewers, suppliers and other businesses wrote a letter to Congress on Tuesday urging lawmakers to vote yes on filling the RRF.

“These businesses – many of which have not received any government assistance to date – simply don’t have weeks to wait as the pandemic continues to impact our economy. … Filling the RRF is a smart and necessary investment that we urge you to prioritize,” the letter, which was shared with Restaurant Dive via email, states.

The conflict in Ukraine and soaring inflation could be partly responsible for the results of the vote. In a separate letter, Sen. Ben Cardin (D-Md.) and Sen. Roger Wicker (R-Miss.) on Monday sent a bipartisan letter of support for the bill to Congress.

“Soon we will vote to extend $40 billion to help the people of Ukraine resist Russian aggression. This funding is badly needed,” reads the letter, which was also shared with Restaurant Dive via email. “However, we must remember that small businesses in the United States also need our help. The legislation we have proposed would help our small businesses keep their doors open.”

The National Restaurant Association also urged lawmakers to fill the fund in a letter Wednesday.

“The RRF was born out of an emergency and helped restaurants endure the disaster caused by
the government ordered closures and capacity restrictions. FRR replenishment should always be
considered an emergency, no different from a hurricane, tornado or wildfire,” the association wrote.

“The hell that this industry has been through, and especially restaurant owners trying to keep their employees, has certainly taken its toll,” Polmar said. “It’s been two years of not knowing how you’re going to survive and how you’re going to keep your employees employed. And if you’re even doing the right things, that’s awful.”

That toll has been dangerous to the mental health of many independent operators, Polmar said. Last month, the IRC formed a partnership with Better Help, an online mental health services platform, to provide free advice to IRC members. The IRC could not disclose how many members have used the service due to confidentiality, but Polmar said the program has been well received.

“Personally, I’ve become a much more capable crisis counselor than I ever imagined,” she said. “There have been days when I’ve been on the phone with someone and texted the Samaritans for advice on how to get someone home when I don’t know where they are. lives because he is about to self-harm.”

Looking ahead, the industry forecast is bleak, especially for low-margin independent operators. Restaurants that did not receive RRF grants are more likely to default on loans, file for bankruptcy and be evicted than competitors who received the grants

Without RRF grants, 48% of independent bars and restaurants risk defaulting on their loans, compared to 22% of businesses that received RRF grants, according to IRC data.

“Local restaurants across the country were expecting help, but the Senate couldn’t finish the job. Neighborhood restaurants nationwide have kept their hopes up for this program, selling their homes, cashing in retirement funds or taking out personal loans in an effort to keep their employees working and their doors open,” Polmar said in a statement. “We estimate that more than half of the 177,300 restaurants awaiting RRF funding will close in the coming months due to Congressional inaction.