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SBA releases list of RRF grant recipients but questions remain

The Independent Restaurant Coalition contends more disclosure is needed about potentially ineligible businesses that won grants

Under pressure for more disclosure, the Small Business Administration on Friday released a list of the 101,004 businesses that received more than $28.6 billion in Restaurant Revitalization Fund, or RRF, grants.

The data dump follows a press conference held by IRC members on Thursday and a Freedom of Information Act Request demanding that the SBA disclose more information about RRF funding. The SBA rescinded grant approval for an unknown number of applicants following multiple discrimination lawsuits filed by white, male restaurant operators who objected to the SBA’s plan to prioritize businesses owned by women, veterans and minorities.

In a statement Friday, the IRC expressed concern that some of the businesses that received grants were not the eating-and-drinking establishments the program was designed to help through the pandemic crisis.

Erika Polmar, IRC executive director, said she was concerned “about the number of ineligible businesses such as recreation facilities, management companies and hotel chains who received grants from the SBA. Congress clearly spelled out that only eating-and-drinking places should qualify for relief.”

SBA officials declined to comment Friday.

The IRC has been lobbying for Congress to refill the RRF program, which ended July 2. The grant fund received more than 278,000 eligible applications representing more than $72.2 billion in requested funding, according to the SBA, far more than the program was able to accommodate. The IRC estimates that more than 177,000 restaurants and bars in need of relief remain on the brink of permanent closure.

“When refilling the fund, we urge Congress to make the necessary changes that will ensure only restaurants and bars receive additional funding in the future,” Polmar added. “We hope the SBA answers our questions about how many individuals awarded grants in the priority period had their awards revoked. Those businesses must be made whole, as should every restaurant and bar impacted by this pandemic.”

Of the grant money awarded, about $18 billion went to underserved populations, including $7.5 billion to women-owned businesses; $1 billion to veteran-owned restaurants; $6.7 billion to businesses whose owners are socially and economically disadvantaged; and $2.8 billion to businesses owned by representatives of multiple underserved populations.

The SBA said the average size of grant awards was $283,000. 

According to the IRC’s review of data released Friday, 10,155 franchise locations received $2.6 billion.

Six Hilton Hotel subsidiary locations received more than $21 million; and five Wyndham Hotel subsidiary locations received almost $3 million, the IRC said.

Though hotels could include restaurants and bars, the IRC said information raises questions about how the funding was used.

In a lawsuit filed in Pennsylvania in May, for example, the parent company to Larry Flynt’s Hustler Club and other strip clubs sued the SBA to challenge their eligibility for the RRF program. The strip club operator argued it should qualify as an eating-and-drinking establishment.

In a response filed Friday, the SBA in court filings gave an indication of what might — or might not —  qualify as a restaurant or bar, saying there is no likelihood that the strip club operator would successfully obtain an RRF grant.

“Larry Flynt’s Hustler Club is not a restaurant. People don’t go to strip clubs for the food, any more than they go to the movies for popcorn,” the SBA argued in court filings.

Contact Lisa Jennings at [email protected]

Follow her on Twitter: @livetodineout

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