How the first week of relief went for restaurants

And how might the Senate and the House add dollars to the RRF?

The application process for the Restaurant Relief Fund (RRF) went a lot smoother than I anticipated. Even though the account registration on the Friday before was an oddity with just an email and password signup, serving more so as a gauge for last Monday’s support staffing, everything else went off without a hitch for the most part.

And here’s why I say for the most part: applying through Square and Toast resulted in never-loading pages on my end and at times, the unfortunate 504 Gateway Timeout Error of doom. Others have found the process to be seamless through the partnered POS providers, which is great for them. In the end, it was perhaps easier for me to file the applications I had through the SBA website, since I can monitor their progress from the SBA portal, as opposed to checking multiple websites.

$2B has already been disbursed to 16 000 businesses, with some having received funds on Tuesday. The quick process from submission to review to approval to disbursement brings forth a sigh of relief. In comparison, the Shuttered Operators Venue Grant, which took months to go live after the Act passing in December and then pausing due to technical errors, is only slated to start fund distribution at the end of this month.

From the White House’s Fact Sheet page, the need for aid has been considerably demonstrated over the first two days with:

  • 186,200 applications received across the country

    • 97,600 applications coming from minority groups

    • 61,700 applications from businesses with under $500,000 in annual pre-pandemic revenue

Unfortunately, not all applications will be funded. President Biden has already stated that the $28.6B will only be able to cover approximately 100 000 businesses. In other words, it is unlikely that any applicants who do not fall into the above sub-bullets will receive any funding this round.

In their many webinars, the SBA has urged everyone to apply quickly and early to show the federal government how much the hospitality industry needs so that they can prioritize replenishing the fund. How the fund gets replenished, though, hasn’t been made entirely clear, although I would suspect that it could be achieved in another round of budget reconciliation or in a subsequent package toward the end of the calendar year (just like what happened with the Paycheck Protection Plan).

How more relief can be funded this calendar year?

Typically, 60 votes are needed to pass a bill in the Senate—reason being that the Senate was designed to be a a place where both parties were forced to work together before making a bill become law. However, there are circumstances where the simple majority (i.e. 51–50 or 50-49) can rule within the Senate, such as with the confirmation of justices and budget reconciliation.

Budget Reconciliation is a process created in the Congressional Budget Act of 1975 with the purpose of making it easier to cut deficits (although the these bills have been used to stimulate the economy in their most recent use cases). The bills within reconciliation package must pass the muster of the Byrd rule whereby the included bills must affect government spending and revenue. The Senate Parliamentarian, a nonpartisan advisor who provides counsel on legislative rules and procedures, determines if the proposed set of bills falls under the scope set forth by reconciliation.

This process is tied to an annual budget with each fiscal starting on October 1. With that in mind, it is not surprising then that reconciliation is only enacted once a year. However, due to Section 304 of the Congressional Budget Act of 1974, the Democrats have sought clarification. Section 304 reads as follows:

At any time after the concurrent resolution on the budget for a fiscal year has been agreed to pursuant to section 301, and before the end of such fiscal year, the two Houses may adopt a concurrent resolution on the budget which revises or reaffirms the concurrent resolution on the budget for such fiscal year most recently agreed to.

Subsequently, Democrats asked: “Can you revise a budget resolution to include new reconciliation instructions as a part of that revision?” The Senate Parliamentarian answered “yes”—the interpretation by both Democrats and Republicans is that the Senate can pass at least two reconciliation bills each year.

What potential lies ahead is that the Senate can pass the initial reconciliation bill, amending it to include additional priorities and possibly add instructions for another reconciliation bill. With the wording of Section 304, though, I’d be curious as to whether or not the Democrats would seek to expand upon current priorities, such as the Restaurant Relief Fund, especially given the the demonstrated demand, or if it is to only be used to for additive measures, or if the Democrats would like to see a separate package for this measure.

After all, the Restaurants Act did have initial bipartisan support. And it is possible to pass a separate bill to add more funds, similar to the second round of PPP and its subsequent extension. Although the timing of such is subject to both the House and Senate being able to usher all of it quickly through without a lot of hemming and hawing.

That said, what I’ve noted about applying additional aid as an amendment to the reconciliation package is speculative at best—Section 304 has never been deployed. (And also, this subject matter is out of my wheelhouse). Should Democrats wish to proceed and revise the budget resolution, they have until the end of this fiscal (September 30, 2021) to do so.

Further reading