Updates from the SBA on the Restaurant Revitalization Fund

And how New York State's $2.1B Excluded Workers Fund works

My first thought in trying to come up with today’s subject line was a longwinded reference to Saturday Night Live’s “Weekend Update” segment. But alas, I don’t think everyone envisions their lives as one long-running television show (like I do).

Where are we at with the relief for restaurants?

On Saturday, the Small Business Administration (SBA) put in writing what they shared in last week’s roundtable with the Independent Restaurant Coalition on their Restaurant Revitalization Fund (RRF) page, as well as a comprehensive and digestible guide and sample application. I have to say that it is great to finally have the updated information on a government page, as opposed to relying on what people have heard through the grapevine.

Updates to the Restaurant Revitalization Grant guidelines

Here’s a quick rundown on what’s been clarified and changed since the Act passed:

  • Timing for the grant’s use-by date has been updated to March 11, 2023

  • Minimum grant is set at $1000 (it has been mentioned in several media outlets, but as I’ve said, it is important to see this figure in writing on the official SBA page)

  • Priority groups are based on self-certification, and the definitions for socially and economically disadvantaged groups have been updated from its cited defintiion in the Act from section 8(a)(4)(A) of the Small Business Act (15 U.S.C. 637(a)(4)(A)) to the following:

    • Socially disadvantaged individuals, as defined by 13 CFR § 124.103, include: Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, Subcontinent Asian Americans, and “members of other groups designated from time to time by SBA”

    • Economically disadvantaged individuals, as defined by 13 CFR § 124.104, include those “whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business who are not socially disadvantaged”

  • The 51% majority rule for stakeholders to qualify in a priority group has been adjusted: a mix-and-match additive approach can be applied to account for multiple stakeholders (for example: if you have five stakeholders with equal shares in a restaurant, and three of them identify as socially disadvantaged individuals, the restaurant will now qualify to be in the priority group)

  • Articulated thresholds of grant allocation, based on gross receipts

    • Previously, $5B was carved out for entities with gross receipts during 2019 ≤$500K with the remaining $23.6B available for disbursement “in an equitable manner to eligible entities of different sizes based on annual gross receipts.”

    • The SBA has reworked the previous “set aside” to ensure those most affected will have a better opportunity to access these funds:

      • Same as previous: $5B set aside for applicants with 2019 gross receipts ≤$500K

      • New: $4B set aside for applicants with 2019 gross receipts of $500 001 ≤ $1.5M

      • New: $500M set aside for applicants with 2019 gross receipts ≤$50K

  • If you use one of SBA’s Point-of-Sale (POS) restaurant partners, you will be able to apply directly via that partner

    • These POS vendors will be able to provide the SBA with access to the relevant sales data

    • Mentioned partners include, but are not limited to: Clover, Toast, and Aloha

  • Required documentation

    • IRS Form 4506-T (digital completion on the SBA platform will suffice)

    • Gross receipt documentation, which may include the following:

      • Business tax returns (IRS Forms 1120 or 1120-S)

      • IRS Forms 1040 Schedule C or Schedule F

      • For partnerships: IRS Form 1065 (and K-1s)

      • Bank statements

      • Externally or internally prepared financial statements, such as income statements or profit/loss statements

      • POS reports, including IRS Form 1099-K

When can restaurants apply?

The website (retaurants.sba.gov) has a temporary landing page, advising that applications will open soon. There were hopes previously from the Independent Restaurant Coalition and the SBA that the application process would begin this month, but we are already halfway through April with updates only arriving now—I suspect that we may have to wait until at least mid-May for the website to be set up and tested before it’s ready for prime time.

So while we wait for more news, I’d encourage everyone to collect the necessary documentation (i.e. what was outlined in the above bulleted “required documentation” section) so that you have all your ducks in a row.

The program guide is also an excellent primer that will help square away a lot of the questions that you may have, and I’d suggest familiarizing yourself with it now.

The $2.1B program for Undocumented New Yorkers

Earlier this month, the Excluded Workers Fund was incorporated into New York State’s new $212 billion budget deal, bringing $2.1B in relief for almost 300 000 undocumented New Yorkers. Where it has been estimated that undocumented workers comprise 10% of all restaurant employees in the U.S., and 20%+ of the country’s cooks, this relief package is much needed, especially as the economic fallout from the pandemic has been devastating to people of colour and immigrant communities, as seen in this year-over-year comparison of 2019 Q3 vs. 2020 Q3.

The specifics of the bill (Part EEE) lay out two tiers of relief:

  • Tier 1: up to $15 600 (less an automatic deduction of $780 for taxes), which is equivalent to unemployment at $300/week for the year previous

  • Tier 2: $3200 (less an automatic deduction of $160 for taxes), which is equivalent to the three rounds of federal stimulus payments: $1200, $600, and $1400.

In order to qualify for either tier, applicants must meet the following criteria:

  • Current resident of New York and have lived in NY before March 27, 2020

  • Lost part or all income after February 23, 2020 due to COVID-19

    • If the breadwinner of your household died or became disabled due to COVID, you will also be eligible

  • Earned <$26 208 in FY2020

While the Tier 1 payment sounds like it will provide a lot of relief to families, The Fiscal Policy Institute estimates that only ~31% of workers will be eligible for the $15 600 benefit. In other words, of the 290 000 undocumented workers, 199 000 will be receiving Tier 2 payments of just $3200. So why is it that so many are unlikely to receive the full amount of aid? Well, it comes down to the required documentation.

In order to qualify for the full benefits, New York residency and a loss of income must be demonstrated. And what’s the easiest way to show income loss? Tax returns—and NYS makes it a point to say tax returns with a valid Individual Taxpayer Identification Number (ITIN). As a side note, many undocumented immigrants do pay taxes. Per a 2020 report, undocumented immigrants in New York have paid $1.4B into state and federal unemployment insurance over the last decade.

Otherwise, loss of income can be established in several ways:

  • Letter from the employer stating dates of employment

  • 6+ weeks of pay stubs from a six-month period prior to the date that you claim to be eligible for said benefits

  • W-2 or 1099 for FY19 or FY20

  • Wage Theft Prevention Act notice given by the employer

The alternative approach to demonstrating loss of income assumes that the undocumented worker is not paid under the table or that the employer is comfortable with this level of exposure (as there are civil penalties associated with hiring undocumented workers, ranging from $500 to over $20 000). Even with the callout in the bill that discusses keeping these records confidential (which I’ll get to shortly), not only is this a difficult conversation for an undocumented person to raise, but it is also one that can be met dismissively by employers citing unease and shirking their responsibility to employees.

Along with proof of state residency, you must prove your identity via a point system. If you have a non-expired NY driver’s license, ID card, or IDNYC card, these forms of ID are valued at the full set of points needed. However, if you do not possess any of the aforementioned, things can start to get a little tricky. Documented breaks down the point system and approved forms of ID in their guide, which very well can be a possible roadblock if you haven’t renewed your foreign passport in years, have your birth certificate in tow, or possess a valid foreign-issued ID card.

And on top of proving your identity, two of the following documents are needed to demonstrate residency (one before March 27, 2020, and one no earlier than thirty days before the law goes into effect):

  • Utility bill

  • Credit card or bank statement

  • Lease, mortgage, or property tax statement

  • Letter addressed to the applicant from New York City Housing Authority

  • Letter from homeless shelter indicating applicant currently lives there or from a nonprofit organization that provides homeless services

  • Whatever other document the Department of Labor commissioner deems acceptable (you can use the same documents to establish identity and residency, such as a driver’s license to show NY residency prior to March 27, 2020 and to prove identity)

From my perspective, the burden placed here on undocumented folks is rather substantial. Even for me to gather some of these documents when I was on a student or work visa was already not without its own set of challenges. I cannot fathom how much more difficult it is for an undocumented person to acquire some of this paperwork.

That said, for those that do not meet the above requirements for Tier 1, they can still qualify for Tier 2, whose requirements have not yet been announced. While this money stands to help many families and is the largest undocumented worker relief program, it is not an easily accessible one and it may take quite some time for the application process to get under way and then make the funds available.

Will this data be used against undocumented workers?

In short, no.

Written to ensure that undocumented workers have nothing to fear in identifying themselves, the bill makes sure to specifically state that the records shared in this program are not to be used or shared with agencies handling immigration matters. This approach is in stark contrast to what I reviewed last week with regards to the Excelsior Pass, which made no effort at privacy against law enforcement or immigration agencies.

The commissioner of labor shall require any person or entity that receives or has access to records to certify to the commissioner of labor that, before such receipt or access, such person or entity shall not:

(a) use such records or information for civil immigration purposes; or

(b) disclose such records or information to any agency that primarily enforces immigration law or to any employee or agent of any such agency unless such disclosure is pursuant to a cooperative arrangement between city, state and federal agencies which arrangement does not enforce immigration law and which disclosure is limited to the specific records or information being sought pursuant to such arrangement. Violation of such certification shall be a class A misdemeanor.

What are the next steps with this program?

Gov. Andrew Cuomo noted in his April 7th press conference that both the State Comptroller and the AG would “review program to ensure fraud protection and protect tax dollars prior to program implementation.”

New York Attorney General Letitia James said she will review the regulations related to the fund before it goes live, especially as the law mandates her to do so under the operative word “shall”.

On the other hand, State Comptroller Tom DiNapoli has stated that his office will not be pursuing the option to review prior to disbursement. The law states, with regards to DiNapoli’s office, that they “may, in his or her sole discretion, review, such regulations and any other rules”.

Apart from the fund being passed through in the FY22 state budget, no additional guidance has been provided on when applications will open or when the funds will be disbursed.

P.S. New Jersey is considering a similar move in supporting the undocumented workforce by providing $40M in one-time stimulus payments; however, advocates are saying this amount of money is not enough to cover the almost 500 000 undocumented immigrants in the state, as it would net ~$87 per person should everyone apply and be granted the funds.

Further reading: