. In Portland, the owners of Oma's Hideaway are determined to make it work. Oops. The lawsuit claims the agency discriminated against defendant Antonio Vitolo, who owns Jake's Bar and Grill in Harriman, Tennessee, because as a White man he was not eligible for priority treatment, even though his wife and co-owner is a Hispanic woman. Weeks later, approvals in-hand, they learned that the relief funds they were promised weren't coming. Nation's Restaurant News is part of the Informa Connect Division of Informa PLC. The program aimed at helping restaurants hit hard by the pandemic has seen applications seeking twice as much aid as the program has funds for, signaling just how much strain COVID-19 has put on the industry. Jakes Bar and Grill owner Antonio Vitolo won the appeal of his lawsuit against the SBA on May 28 after a Sixth Circuit court panel ruled that the 21-day prioritization program is unconstitutional. WebContact LPG. We will fight it wherever it shows up," said the institute's President and General Counsel Rick Esenberg in a statement. "I'm going to try to restart my business because I have no choice other than personal bankruptcy," she said. The legal complaint argues that the fund requires the SBA to discriminate among restaurants according to the race and sex of the owner, by specifying that during the first 21 days of the program that officially began last week, the SBA administrator must prioritize awarding grants to businesses owned by women and racial minorities., These race and sex preferences are patently unconstitutional, and the Court should promptly enjoin their enforcement. On Friday, June 11, the Small Business Administration paused the disbursement of pandemic relief funds to thousands of minority-owned businesses. For the first 21 days, the fund was open for applications from women, individuals who are economically or socially disadvantaged, and veterans. The fund launched May 3 as partof the American Rescue Plan Act. A letter obtained by Nation's Restaurant News told those applicants awaiting funds: The SBA is not able to pay 2,965 priority applicants including yourself who were previously approved and notified of their approval. "Depending on what the landlord does, we could stay open, we could close tomorrow, if he decides to kick us out. In determining the degree of diminished credit and capital opportunities the Administration shall consider, but not be limited to, the assets and net worth of such socially disadvantaged individual." In a recent Zoom call with independent restaurant operators, Erika Polmar, executive director of the Independent Restaurant Coalition (IRC) said that it's unlikely the measure will pass as a standalone bill, but instead might be added to a reconciliation package like the bipartisan infrastructure package, potentially in July. Expertise: restaurant technology and operations. Copyright 2023 CBS Interactive Inc. All rights reserved. A little over a week later, more restaurant owners received emails telling them that their previously approved grants would not be disbursed. ): Plaintiff Philip Greer owns and operates Plaintiff Greer's Ranch Cafa restaurant which lost nearly $100,000 in gross revenue during the COVID-19 pandemic . But not everyone waseligible or will receive funds. NEXT: ACLU-Connecticut Condemns "Racial Ridicule" Arrest for Online Post. "As a small, independent business that is partially owned by women and people of color, I think we're very un-used to pleasant news from a bank. The New York event company owner, who asked to not be named, has had to move out of her apartment because she couldn't pay rent. Greer filed suit, claiming that the SBAs policy violates the Equal Protection Clause of the Constitution. Web page addresses and e-mail addresses turn into links automatically. The SBA received requests for more than triple the allocated funds. There was no word from the Justice Department on whether they would appeal the ruling. More:Neighborhood improvement, fighting poverty among priorities for Detroit's $400M rescue fund, More:New Michigan law clears the way for higher-alcohol canned cocktails, According to the lawsuit, Vitolo, a white male, claims that giving priority to certain groups "putswhite male applicants at significant risk that, by the time their applications areprocessed, the money will be gone. However, in the split panel decision on May 28, the majority opinion overturned this opinion, stating that the SBAs prioritization of certain groups over others was racial gerrymandering and ordered the government to fund Vitolos grant application, if eligible. The owner of a weddings and events business in New York City contacted couples to say she would soon be able to refund some of the money they put down as a deposit on their canceled 2020 weddings. The judge wrote that Congress has gathered myriad evidence suggesting that small businesses owned by minorities have suffered more severely than other kinds of businesses during the COVID-19 pandemic, and that the Governments early attempts at general economic stimulus disproportionately failed to help those businesses directly because of historical discrimination patterns., Similarly, McDonough said Congress had before it evidence showing that woman-owned businesses suffered historical discrimination that exposed them to greater risks from an economic shock like COVID-19, and that they received less benefit from earlier federal COVID-19 relief programs.. Sean Kennedy, executive vice president for public affairs at the National Restaurant Association, said that all priority group applicants who will not receive promised grant money have been notified. from America First Legal (AFL) specifically takes issue with the Small Business Administrations (SBA) handling of the $28.6 billion in the Restaurant Revitalization Fund within President Bidens American Rescue Plan package passed by Congress. Croson Co. (1989). Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Restaurant Revitalization Fund Replenishment Act of 2021 On June 11, 2021, Congress introduced the Restaurant Revitalization Fund Replenishment Act of 2021 to replenish the fund with $60 billion. The plaintiffs argue that even though the distributed grants cannot be returned, the Sixth Circuits decision will have further-reaching impacts on COVID-19-related federal aid: The Sixth Circuit decision sets the precedent that racial and gender priorities such as the ones in American Rescue Plan Act are unconstitutional, Rick Esenberg, president and general counsel for the WisconsinInstitute for Law and Libertysaid in a statement. The Small Business Administration declined to comment on pending litigation. She's worried for the future of her restaurant, one of the only places in her area that serves locally sourced food at accessible prices. The restaurant was named for Tom Pisha-Duffly's grandmother his oma who passed away from COVID-19 in the early days of the pandemic. "Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities. The National Restaurant Association agreed that the ruling would not have much impact on the day-to-day ability of the SBA to administer the RRF but they do not know whether this ruling will impact government-issued grants or loans moving forward. Defendants propose as the government's compelling interest "remedying the effects of past and present discrimination" by "supporting small businesses owned by socially and economically disadvantaged small business owners who have borne an outsized burden of economic harms of [the] COVID-19 pandemic." She launched her second newsletter, Expedite, independently three years later to continue chronicling the evolving restaurant technology industry. Under the Biden restaurant relief program, restaurants and bars can qualify for grants equal to their pandemic-related revenue losses, with a cap of $10 million per business and $5 million per location. Something went wrong. (Damian Dovarganes/AP). These race and sex preferences are patently unconstitutional, and the Court should promptly enjoin their enforcement. The SBA, tasked with managing the relief funds, announced on May 10 that 16,000 businesses were approved for grants totaling $2 billion in just the first week. A $28.6 billion federal restaurant aid fund has in its first week received more than 266,000 applications from struggling restaurants, many of which come from the women- and minority-owned businesses the fund is prioritizing. As of June 30, the program had distributed all $28.6 billion to 105,000 restaurants, according to an email to business owners from the Small Business Administration (SBA). Of course, the Biden Administrations guidance does not prohibit white business owners from obtaining relief from the fund, it just requires that the Small Business Administration prioritize applications from women-owned, minority-owned, and veteran-owned businesses for the first 21 days that applications are open. 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