From “congratulations” to “fully canceled”: California café owners hit roadblock


July 23 (Reuters) – After more than a year of heavy losses at their two San Francisco Bay Area cafes, Amy and Chris Hillyard were relieved to learn in May that they had been approved for a grant of $ 381,000 from the US Small Business Administration.

The money came from a fund earmarked by Congress for restaurants affected by the economic fallout from the coronavirus pandemic, such as Hillyards’ Farley’s SF and Farley’s East operations.

Equal to their losses last year, this would allow the couple to pay off debt, hire new employees, extend hours of operation, replace a broken freezer, buy tables and chairs for them. eating al fresco and doing all the other things Chris Hillyard says needs to be done “to get back to normal and be ready for normal, in September,” when one would expect more workers return to neighboring office buildings.

Then, last month, the Hillyards learned they weren’t going to get the money in the end.

“We’re back in a pattern of waiting,” Chris Hillyard said. “It’s not a very fun place.”

Even after roughly $ 800 billion in assistance from the Federal Paycheque Protection Program (P3) and nearly $ 30 billion more allocated to hard-hit restaurants this year, small businesses in America face an uncertain outlook.

Many businesses that thrived before the pandemic are still hampered.

At the same time, a widely expected wave of bankruptcies did not materialize, with business bankruptcies in 2020 at their lowest level in five years and deposits since the start of the year even lower, according to the provider of Epiq AACER data.

Regional disparities complicate the picture.

Some 35% of San Francisco Bay Area establishments like those in the Hillyards still report a significant negative impact from the pandemic and more than 41% believe it will take more than six months to return to normal, a survey of the US Census Bureau Mid-July Shows. Meanwhile, in Atlanta, only 21% and 31%, respectively, of respondents reported the same concerns.

This suggests that a true national recovery may be far away.

“The problem is for the economy, the pandemic has lasted longer than we thought, and it appears that different industries and different geographies have been affected very differently,” said Karen Dynan, professor of economics at the Harvard University. “This is just another reason why we are not going to see the economy return to full employment overnight.”


Reuters has been following the Hillyards and their coffee shop business since March 2020, when they laid off all their staff after California shut down all “non-essential” businesses. They reopened six weeks later on a PPP loan, got through the summer with the help of donors like Golden State Warriors basketball star Stephen Curry, and weathered the viral winter wave and renewed government restrictions. on business with a second PPP loan.

But despite the state’s decision to end all pandemic-era restrictions in mid-June, Farley’s in San Francisco only made 70% of its sales before the pandemic. Farley’s East in Oakland – the larger operation of the two – is only 40%, and any hope for improvement depends on how companies deal with the return of their employees to the office.

“I think the service sector that has supported the inner-city working community is an industry we should be concerned about,” Dynan said, as many companies will likely allow at least one remote job in the post-period. pandemic. “Breakfast places, canteens, dry cleaners, pharmacies in the city center – they just won’t see such high demand. “

The Hillyards spent the $ 520,000 in federal aid they received, most of it on the payroll of their 20 employees.

The last grant the Hillyards relied on was part of the $ 1.9 trillion pandemic relief program passed by Congress and signed by President Joe Biden in March, which included $ 28.6 billion for restaurants who lost money during the pandemic.

By the time the restaurant fund was depleted, the owners of 278,000 restaurants had applied. Some 101,000 have secured grants ranging from $ 10 million to $ 1,000, critical support for one of the sectors hardest hit by the pandemic.

The Hillyards were relieved to be among them.

“Congratulations,” read the May 18 email from the SBA. “Your request for the SBA Restaurant Revitalization Fund has been approved.” He continued, “The SBA will now process the funding for this award directly to your bank account within 3-7 business days of this notification.”

Weeks passed. The Hillyards have made inquiries. “Rest assured that the prize funds are reserved for nominations that have been fully approved and will be sent,” said a response from the SBA portal reviewed by Reuters.

On June 23, Chris Hillyard received another email from the SBA. “We regret to inform you that due to recent court decisions, the SBA will not be able to disburse your award from the Restaurant Revitalization Fund,” it read.

A legal group founded by Stephen Miller and Mark Meadows, who held senior positions in former President Donald Trump’s White House, sued the SBA in Texas, arguing that the Biden administration’s efforts to prioritize candidates over the basis of race and gender were unconstitutional.

On June 11, the court banned the SBA from distributing more funds to priority claimants like Farley’s, which is predominantly female-owned due to Amy Hillyard’s larger stake in the business.

“In the next few days… you will see the status of your application on the SBA portal change to ‘fully canceled’,” the June 23 email said. Some 2,964 other restaurant owners have received similar notices, the SBA said. A spokesperson for the SBA said the agency was “frustrated” by the outcome and remained committed to helping disadvantaged businesses.

The Independent Restaurant Coalition, a U.S. business group that lobbied for the subsidy program to be included in the pandemic relief bill, is now trying to convince Congress to replenish the funds for the program.

For the Hillyards, it’s a cold comfort, even as the economy as a whole, despite the rising tide of COVID-19 infections, is coming back to life. Their cafes continue to lose money every month.

“It’s all coming back to normal – but our business hasn’t returned to normal, and it’s going to take us a lot longer to get there,” said Chris Hillyard.

Report by Ann Saphir; Editing by Dan Burns and Paul Simao

Our Standards: Thomson Reuters Trust Principles.

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