Last year, thousands of pandemic-hit restaurants applied for government aid through the Restaurant Revitalization Fund (RRF). But then the program ran dry before everyone in line was taken care of.
Now, after months of waiting for approval, the Senate was unable to move forward on replenishing the fund. The vote needed 60 votes to proceed but faced stiff Republican resistance, failing with a vote of 52-43.
Upon the news, Michelle Korsmo, president and CEO of the National Restaurant Association, said in a statement, "Today’s vote will further exacerbate those challenges and result in more economic hardships for the families and communities across the country that rely on the restaurant and foodservice industry.”
Advocates say it could mean the difference between some hospitality businesses holding on or closing their doors. “This is their last opportunity,” Senator Ben Cardin (D-MD) said of restaurants awaiting the money, during an interview with Yahoo Finance Live before the vote. "[These are] Ma and Pa–type businesses, and they've taken out mortgages on their homes to keep the restaurant open — they're having a hard time competing with those other restaurants that got the help,” he said. “It's desperate.”
'Then they ran out of money'
May Mendoza Nardone owns Mikel May's Beachside Bar & Grill in Corpus Christi, Texas, and says her business is on the line. example. She said she'll "have to really try to work with banks and see about getting loans — and that's an if." Nardone noted that banks have "gotten a lot stricter with everything now and then of course with the rates starting to go up."
Nardone had been approved for funds last year, had even given her checking account information and was awaiting IRS verification. "And they said, 'That's all we're waiting for and then we'll fund your account and that'll be any day now,'" she remembered with a rueful laugh. "Then they ran out of money."
Erika Polmar, the executive director of the Independent Restaurant Coalition, said in a statement: "We estimate more than half of the 177,300 restaurants waiting for an RRF grant will close in the next few months as a result of Congressional inaction.”
The vote comes as the hospitality industry as a whole struggles. Just under 11.6 million people worked in food services and drinking places in April 2022, which is still well below the 12.4 million employed in the industry on the eve of the pandemic.
‘If we shut down completely, it would really, I think, hurt the economy’
Cardin led the charge ahead of the Thursday vote along with Sen. Roger Wicker (R-MS). The bill would have provided an additional $40 billion to the restaurant fund and billions more for other small businesses such as gyms, live venues, and others, for a total price tag of $48 billion.
It would have revitalized a program that was rolled out with much fanfare in 2021 as part of the American Rescue Plan. In April, the House of Representatives passed a similar bill largely along a party line vote of 223-203 to provide $42 billion for restaurants and an additional $13 billion for small businesses structured in a somewhat different way than Cardin proposed.
The vote failed in the face of continued skepticism from Republican lawmakers of more COVID aid. Many Republicans argue that the additional pandemic aid to help restaurants and other small businesses is unnecessary and that more government spending could exacerbate inflation.
Nardone experienced heard these opinions herself when she traveled to Washington in recent months to lobby for more money when her representatives in Congress expressed skepticism about offering a "handout."
"I said, 'I understand handouts. Nobody wants to do a handout, but don't look at us as a handout. Look at us as an investment,'" she said, adding that her beachside restaurant has been struggling to recover from both COVID closures and Hurricane Hanna in 2020. "If we shut down completely, it would really, I think, hurt the economy and our local economy."
She says she spoke to her congressman, Rep. Michael Cloud (R-TX), directly and staff members for Sens Ted Cruz (R-TX) and John Cornyn (R-TX). In the end, all three lawmakers voted against the additional funding.
"We've just been hit from all sides," Nardone said. "We barely survived COVID and now we have all these extra expenses that are on the backend, and it's just been a real challenge."
This post had been updated with Thursday's vote in the Senate and additional context.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.