Restaurant Revitalization Fund Is Designed To Be More Equitable Than Paycheck Protection Program

While the PPP loan left out many minority business owners, steps have been taken to present the RRF to a more diverse group.

At the beginning of the pandemic, government assistance to business owners was not distributed equitably to minorities. As new federal funding, the Restaurant Revitalization Fund, is being doled out, area businesses and community members are hopeful that lessons from the botched rollout of Paycheck Protection Program (PPP) loans will make this round of funding more equitable.

It’s difficult to tell whether PPP loans were handed out fairly because most business owners who applied did not include their race. But some researchers have found ways to look into how equitably funds have been distributed to businesses during the pandemic.

“A lot of business owners just aren’t ready to tap into what would be the traditional means of outreach.” — Tenecia Johnson, Detroit Economic Growth Corporation

One research team used the University of Southern California’s Understanding America Study’s Coronavirus Tracker to survey a nationally representative group of 6,300 people. They asked business owners, entrepreneurs and self-employed people with employees if they received government aid between March and May of 2020. What they discovered was a disparity for Black business owners.

“We found that less than a half of 1% of Black business owners received these funds, compared to about 9% of non-Black business owners,” says Felix Kabo, a faculty member at the University of Michigan Institute for Social Research and lead on the study. “In other words, Black business owners were 30 times less likely to receive these government funds.”

Analysis by Reveal Reporting Network in partnership with Michigan Radio found white neighborhoods received PPP loans at 1.3 times the rate of majority-Black communities, and twice the rate of majority-Latino communities. The conclusion was made by dividing census tracts by their predominant race, and then looking at the estimated number of businesses there and how many businesses actually received PPP loans.


Listen: The Detroit Economic Growth Corporation canvasses to get the word out about the Restaurant Revitalization Fund.


There are a number of reasons why minority-owned businesses might not have received their fair share of government financial assistance so far during the pandemic. Kabo says more Black businesses received PPP loans in the second phase than the first, which indicates it might have taken longer for information about the program to reach these businesses or, possibly, for Black owners to finish their applications. Additionally, Kabo says he talked to several lenders who said that some minority businesses weren’t “loan ready,” meaning the businesses didn’t have the financial information lenders want to see before they issued funds. And some minority business owners were at a disadvantage because they hadn’t worked with a bank or traditional lender before.

“There was this correlation between having an existing relationship between the borrower and the financial institution and receiving PPP and other government funds,” says Kabo. “Financial institutions are more likely to favor lending to the business owners they already have relationships with.”

Laura Herberg/WDET
Laura Herberg/WDET

Have Lessons Been Learned?

Though the rollout of PPP loans was flawed, the government has a second chance to distribute funds more equitably. Enter the Restaurant Revitalization Fund, a new opportunity for small businesses written into the American Rescue Plan passed by Congress in March. This federal fund, doled out by the Small Business Administration, is aimed at helping food-based establishments make up the finances they lost in 2020, and was designed to do so in a more equitable way than previous pandemic funding.

First of all, it addresses the lender issue Kabo brought up. This time around, businesses can apply directly through the Small Business Administration; they don’t have to apply through a financial institution they may have never talked to before. Secondly, the Restaurant Revitalization Fund sets aside a special window period specifically for under-served business owners.

“The first 21 days, food-based businesses that are either minority-owned, women-owned businesses, veteran-owned businesses, or from economically disadvantaged communities, they are eligible for priority consideration,” explains Tenecia Johnson, a Business Liaison for the Detroit Economic Growth Corporation (DEGC).

In order to get the word out about the Restaurant Revitalization Fund, the DEGC is talking face-to-face with eligible businesses across the city. Johnson is leading the effort for the northwest corner of Detroit where she’s overseeing a team of volunteers and also canvassing herself.

Laura Herberg/WDET
Laura Herberg/WDET

Johnson’s first stop is J’s Café, a soul food restaurant on the corner of Grand River Avenue and Burt Road. The establishment is known for its salmon croquettes and turkey chops. Inside, there’s a long white counter and a just a few booths. A couple of tables are draped in caution tape to adhere to social distancing requirements in place at the time. Johnson sets a packet down in front of Jaclyn Thomas, the owner’s daughter who is also a manager and waitress.

“This is the Restaurant Revitalization Fund. It’s a fund that’s available to food-based businesses like this one where you can get up to $5 million per location. So, this is a huge one. Do not miss this opportunity so you can take advantage of getting access,” Johnson tells Thomas.

When the PPP loan came out, the DEGC tried to help spread the word, mostly online, by leaning on pre-established relationships and partnerships. But this time they’re trying a more hands-on approach.

“A lot of business owners just aren’t ready to tap into what would be the traditional means of outreach, which are email lists that are from maybe some of the larger chamber of commerce organizations that they’re not plugged into, or they’re maybe startup networking groups that a lot of minority- or women-owned businesses may not have direct access to,” says Johnson. “So, doing this work, especially for this fund, is critical because we’re the priority group.”

Being In the Loop

That’s not to say that there aren’t plenty of businesses that fall into the priority group that are already in the loop. Take for example Johnson’s next stop, Sweet Potato Sensations. The Detroit institution sells a large variety of sweet and savory fare made from the orange tuber. Inside the shop, which has creamy orange-colored walls, Johnson walks over to Espy Thomas, the owners’ daughter who says her official title is “Queen of Awesomeness.” Thomas says everyone has been making sure her family knows about the Restaurant Revitalization Fund.

Laura Herberg/WDET
Laura Herberg/WDET

“When the fund went out, it was like hella emails from everybody,” says Thomas. “Detroit Means Business, City of Detroit, you … I mean I think the NAACP may have sent something! Everybody was sending like, ‘Get this money if you can get it!’”

Thomas says Sweet Potato Sensations headed the advice and applied as soon as possible for the Restaurant Revitalization Fund. But they didn’t get it.

“It was like, ‘Zero.’ I was like, ‘What are you talking about, zero?’” says Thomas.

It turns out, the bakery/café didn’t receive funds, in part because they’re so tapped in. They were one of the few Black-owned businesses to receive a PPP loan last year, and in doing so, they made too much money in 2020 for their business to be eligible for the Restaurant Revitalization Fund. Thomas says Sweet Potato Sensations could still use the financial boost, but she’s OK with missing out on the opportunity.

“You know, what I really believe is what’s for us is for us. I honestly do. And sometimes it’s disappointing. But maybe there’s somebody else that did not qualify for PPP that really needed the funds,” says Thomas.

“When the answer can’t be yes, it is very detrimental,” says Johnson, back in the car. “We don’t control the decision on whether or not your application is approved or not. So, we can only do outreach and support.”

Johnson says citywide the DEGC alerted more than 300 businesses about the Restaurant Revitalization Fund. The special priority window ended May 24, which means the fund is currently open to all eligible businesses until funding runs out. Only then will stakeholders find out if the money was distributed more equitably this time around.

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Author

  • Laura Herberg
    Laura Herberg is a Reporter for 101.9 WDET, telling the stories about people inhabiting the Detroit region and the issues that affect us here.