New York City restaurants await $ 25 billion federal subsidy program as paycheck protection program shuts down

“The PPP was a dressing for our industry,” said Rob Bookman, general counsel for the New York City Hospitality Alliance. “It was never designed for the restaurant industry.

Many of the terms of the PPP loan that convert the money into a forgivable grant – withholding of employee payrolls, utility payments, and interest paid on loans – did not apply to restaurants paying their vendors or rearranging their exteriors for outdoor dining in winter.

A new solution is currently being developed by Congress as part of negotiations for the $ 1.9 billion stimulus package proposed by the Democrats. Senate Majority Leader Chuck Schumer introduced an amendment for a $ 25 billion restaurant relief grant in the last vote on the budget reconciliation process last week, which was passed by the Senate in ‘a 90-10 bipartisan vote.

Nothing has been formally written about the $ 25 billion amendment, but the plan is to use the money to create a grant program that would tie the amount allocated to applicants with the difference that each restaurant lost in revenue. between 2019 and 2020. Chains or franchises with more than 20 locations would not be allowed to participate, and the grant amount could reach a maximum of $ 10 million per applicant.

“This is a direct grant that would not create unnecessary debt for restaurants,” said Andrew Rigie, executive director of the New York City Hospitality Alliance. “The most important thing is that this restaurant program has the right structure. ”

Even though Congress intends to create the fund, the money may not be enough for New York restaurants seeking relief from a national program.

“$ 25 billion alone would be enough for New York State, but it will be nationwide, so it will be a race to get the money before it runs out,” said Melissa Fleischut , president of the New York State Restaurant Association. His group estimates that restaurants lost $ 240 billion in sales last year.

Schumer is working on the language to ensure New York City receives a significant chunk of the funds, as restaurants across the state have been among the hardest hit.

Timing is another issue.

The real plight of New York City restaurants has been obscured by the success of al fresco dining during the summer and fall months – and the persistence of some New Yorkers to dine out under heat lamps in the winter. – according to Bookman, who described external activity as an illusion that does not reveal what is hiding in the ledger books.

“What they don’t see is the house of cards: nobody pays their rent in full and most people don’t pay rent,” he said. “At the same time, they are increasing each month the amount of debt they owe the owner. ”

Many restaurants have been kept alive thanks to a combination of state and city emergency measures. Gov. Andrew Cuomo issued orders in council extending eviction moratoria for commercial tenants, which expire May 1, 2021, while city council passed legislation banning the application of personal guarantees on commercial leases until the 31st. March 2021.

“But as soon as the decrees and protections end, we will have a tsunami of people handing over their keys and lots of empty storefronts,” Bookman said.

State comptroller Thomas DiNapoli estimated permanent closures of one-third to one-half of all restaurants in the city that existed before the pandemic. The Hospitality Alliance found that the city lost 130,000 restaurant jobs last year, with restaurants closing inside commissioned by Cuomo in winter, costing an additional 14,000 jobs in December alone.

Even if restaurants inside New York City open at 25% capacity on February 12, congressional negotiations over the $ 1.9 trillion stimulus package in the House and Senate could last for years. weeks.

“I hope we find out soon,” Rigie said. “We are sounding the alarm bells on the urgency and the timeliness of the matter.”

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