$30 million to be distributed to pandemic-affected Connecticut hospitality businesses

The state has allocated $30 million to give grants to hospitality-industry businesses that have suffered as a result of the coronavirus pandemic, Gov. Ned Lamont announced Monday at a news conference at a restaurant in Norwalk.

Connecticut Hospitality Industry Support Grants, ranging from $7,500 to $49,999 depending on the amount of loss and comparison of yearly gross receipts, will go to restaurants, hotels, breweries, wineries, entertainment venues, travel services, transportation services and other businesses, Lamont said at the news conference at El Segundo restaurant.

Checks to eligible businesses will be issued by the Department of Revenue Services this week. The money was issued to the state’s Department of Economic and Community Development as an element of the American Rescue Plan Act, and is part of the recently passed state budget.

“So many locally-owned small businesses in the hospitality sector are continuing to recover from the pandemic, and any bit of relief that can be provided will help support them and their workers,” Lamont said.

Alexandra Daum, deputy commissioner of DECD, said the program “is intended to serve as a stabilizing force as our hospitality businesses get back to full operations and customers return to pre-pandemic behaviors.”

According to the DECD, “the funding can only be used for eligible expenses incurred on or after March 3, 2021, and must be used to mitigate financial hardship, such as by supporting payroll and benefits; costs to retain employees; mortgage, rent, utility, and other operating costs; maintenance of existing equipment/facilities; or costs to support COVID-19 mitigation and infection prevention measures.”

The DECD adds, “funding cannot be applied to any expenses that are already covered by any other governmental or private source, including insurance proceeds.”

Scott Dolch, president and CEO of the Connecticut Restaurant Association, said “even as restaurants have worked to recover from the pandemic, they’ve faced new headwinds in the form of inflation, worker shortages, and supply chain disruptions. We’re thankful that the state is taking this step to help local businesses.”

Dolch said that businesses that got federal Restaurant Revitalization Fund grants in 2021 weren’t ineligible for this round of funding. However, in computing need, the DECD added the amount of their RRF grant to their 2021 revenue.

“The 2021 gross receipts were compared to the 2019 gross receipts. ... Those who received [RRF], it doesn’t totally knock you out, but by adding those receipts, say you got a $300,000 [RRF] check, you’d be hard-pressed to be considered eligible,” he said.

Dolch was pleased that this funding measure included businesses that opened in 2020, 2021 and early 2022.

“Up to now there were no programs for them, no PPP, no RRF. All the grants early on, you had to show the pre-pandemic numbers and they didn’t have them,” Dolch said. “This program ... also targeted the little over 600 businesses that opened during the pandemic. They are going through the same struggles and were unable to get any support.”

Funding sources

Embattled Connecticut restaurateurs were offered a ray of hope in 2021, with the RRF, which offered $28.6 billion in relief to restaurants nationwide. That hope disappeared for many. A flood of 278,304 applications were submitted, stating need totaling $72,233,280,031. In the end, just 101,004 of applicants, about 40%, were awarded grants, according to the Small Business Administration, which administered the funding.

In Connecticut, 3,369 Connecticut restaurants applied for RRF grants totaling $790 million. Of that, only about one-third, 1,303, received funding, totaling $301,164,069.

Efforts to replenish that fund to give grants to all of the overlooked restaurants failed in the U.S. Senate on May 19. The National Restaurant Association called the failure “a devastating blow to the restaurant industry and small business operators.”

Investigations are continuing since the disbursements of the RRF money. Incidents of fraudulent or ineligible applications have been suspected regarding some applicants, according to the U.S. Government Accountability Office.

“SBA ... prevented over 30,000 suspicious applications from receiving awards. But it flagged 4,000 award recipients for suspected fraud and isn’t taking timely action to address them,” a GAO report from July 14 states.

Catherine Marx, district director of the U.S. Small Business Administration in Connecticut, said “Every day I see cases of fraud that have been adjudicated. So people who defraud the government are definitely getting caught. Right now I’m seeing PPP loans. There is a lot to work through. ... Hopefully that money will go to restaurants that did not get the funds.”

That GAO report, quoting data from usaspending.gov, also stated that as of June 2022, there was still $180 million in the RRF.

“The unobligated funding includes $24 million set aside for litigation, and the remainder results from realized or anticipated recoveries. SBA data also indicate that about $56 million came from returned awards. ... SBA officials said some of the recovered funds also came from awards the Department of the Treasury administratively offset and returned to SBA,” stated the report.

Marx said when the Justice Department resolves litigation pertaining to equity issues of the RRF, “the SBA stands ready to distribute the remaining funds.

“There will be money. How many restaurants receive the funds will depend on how the litigation is settled. That can’t be answered yet,” Marx said.

Susan Dunne can be reached at sdunne@courant.com.