Pandemic relief fund granted nearly $2 billion to L.A.-area restaurants, but many missed out

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Edward Flores, 56, a fourth-generation owner of Juanita's Cafe on Olvera Street, stands for a photo in his restaurant in Los Angeles, Friday, June 4, 2021. (AP Photo/Jae C. Hong)

Edward Flores, 56, a fourth-generation owner of Juanita’s Cafe on Olvera Street, stands for a photo in his restaurant in Los Angeles, Friday, June 4, 2021. (AP Photo/Jae C. Hong)

When Edward Flores, the owner of a small food stand along downtown Los Angeles’ Olvera Street, got word that he had been approved for a Restaurant Revitalization Fund grant in May, it felt like a weight had been lifted off his shoulders.

The pandemic had taken Juanita’s Cafe, a restaurant that has been in his family for three generations, right to the edge of insolvency. In the initial months of the pandemic, Flores had to lay off his entire staff and work about 110 hours a week on his own just to stay afloat. 

At the height of the pandemic, he said business was down more than 87%. 

The 56-year-old applied for more than a dozen loans and grants to try to keep his small family food stand along L.A.’s oldest street alive, as there was too much on the line not to exhaust every option, he said. 

Flores said the restaurant had been lively — filled with tourists who sought out iconic Olvera Street, with its colorful curio stands and brick pathways meant to invoke old Mexico. Once COVID-19 spread, it was practically dead.

“Before the pandemic hit, we were open 12 to 13 hours a day and would be closed only one day a year. We are tourist destination, so it would be busy here all the time,” he said. “But after the pandemic, there’s been no life. I’ve seen many businesses here go under since.”

Flores applied for a Restaurant Revitalization Fund grant on the day that the application portal opened. Shortly after, he received an email notifying him that his request had been approved. 

The $28.6 billion Restaurant Revitalization Fund program, tagged onto the Biden administration’s American Rescue Plan in March, was established to help businesses stay open. Grants from the fund were meant to cover food-service businesses for their pandemic-related revenue loss, essentially giving grantees much-needed financial breathing room.

Flores said just over $130,000 approved from the relief fund would have helped him operate at near full capacity through the end of the year by enabling the restaurant to hire back lost staff, repair appliances and pay off lingering debts. 

“When I saw that, I was so stoked and happy about it,” he said. “It wasn’t the full amount of what I had lost, but it would have helped me all the way through December.”

But Flores was soon sent into a tailspin. 

Just a few weeks ago, Flores received a follow-up email from the Small Business Administration, or SBA, the agency overseeing the fund. The message said it would not be able to pay out the promised award. 

When Flores saw the email, “I was confused at first,” he said. “And then my heart just sank.”

“I’ve gotten so many rejection letters. It was just so heartbreaking,” he said. “All the help they say is out there — I think it’s all a lie. Just imagine getting one rejection after another.” 

When the Restaurant Revitalization Fund first launched in early May 2021, businesses owned by women, military veterans and “socially and economically disadvantaged” individuals were given first priority for funding for the first 21 days. But within weeks, the SBA was already flooded with applicants — 303,000 business owners applied as of May 18, adding up to more than $69 billion in requests.

More than half of those initial applicants — 57% — were members of priority groups. At the time, the SBA also said it had already approved about 38,000 applications, allocating $6 billion in funds. All of the initial grant recipients belonged to priority groups.

But after lawsuits were filed claiming that the race and gender prioritization was discriminatory, the SBA changed its eligibility requirements and stopped payment on priority applications, the agency explained.

That led to the SBA freezing pending payments to at least 3,000 priority applicants — including Flores — and the SBA disbursed its remaining funds to non-priority applicants.

And now the money has run out.

Last month, the U.S Small Business Administration announced the closure of the relief fund.

More than 278,000 businesses nationwide applied for grants but according to the SBA just 36% of those applicants were given anything.

Of the 101,000 restaurants and food businesses nationwide that were given grants, nearly 16,000 were California businesses that received a total of $5.7 billion. 

Restaurants, bars and related food service businesses in Los Angeles County were approved for nearly $2 billion in relief funds, accounting for nearly 35% of the total grants allocated to California, a KTLA analysis of the data found. The average grant size in L.A. County was more than $350,000 — about $7,000 less than the state average.

While the SBA did not release a county-level breakdown of how many applicants received grants, nearly 36,400 businesses in California applied for the Revitalization Fund and more than half — 56% — did not receive a single dime, data showed.

That leaves thousands of the state’s restaurants unfunded.

Oscar Rodriguez, owner of Cantarito Molito’s Grill in Long Beach, is one of the many business owners who felt left behind by the program. He applied for the Restaurant Revitalization Fund and waited to hear back while his applications was “pending,” only to find out recently that the funds had run out.

“It’s been really hard. I’ve worked so, so hard … all my life, working for something,” he said, as he struggled to choke back tears. “You know, my mom asked me, ‘Why do you work so hard, going in early morning and coming back late at night, and yet have no money?’… But I say this is my passion. This is my life.”

After working in the food service industry for over 20 years and dreaming of one day owning his own restaurant, the 50-year-old bought the Mexican restaurant on Pacific Coast Highway last February and opened it a month later, just before the pandemic hit.

Like so many business owners who struggled to stay open in the early months of the pandemic, Rodriguez said he has gone deep into debt keeping Molito’s Grill open.

In late January, KTLA visited Rodriguez’s restaurant when community support started pouring in after a heartfelt video post on Instagram went viral. In the video, Rodriguez tearfully informed his customers that his business has been drowning in debt and was on the verge of closing.

The community rallied and donations and customers poured in to keep the new business afloat. Rodriguez said Ellen DeGeneres sent him a check after she featured him in his show. But the funds dried up quickly, Rodriguez said.

“People sometimes would ask what happened to that money. They don’t understand the overhead costs and how the water bills, gas bills, rent, etc., just keep piling up,” he said. “I was already so behind on all the bills, and I was just trying to catch up. All my savings are gone. I can’t even tell you how much debt I’m in.”

A month ago, Rodriguez said he was so in debt that he laid off his entire staff, slimmed down his menu to mainly tacos and moved his operations to a tent in the parking lot of his restaurant building.

“I had to think outside the box and rearrange my hours and operations just to survive,” he said. “The reason why I do tacos is because it’s easy, I have a grill and I’ve been working all by myself for a while.”

Rodriguez says he would have gone under long ago if he hadn’t been able to again start holding drag shows, which had been a big draw before the pandemic.

After the state eased most of its pandemic restrictions on June 15, he was able to start up the shows again — on Fridays and during the weekend.

“I really would have closed down two weeks ago if it weren’t for that,” he said. “I’m really grateful for the community and all the support I have. I’m tired and my body hurts from the stress and all the pressure … but I have a passion and love for what I do. I don’t want to let it go. I don’t think it’s time yet.”

Rodriguez said he’s aware the pandemic is not over yet as cases in L.A. County and nationwide are spiking again.

Meanwhile, restaurant industry leaders are lobbying for a second round of the federal program. The RRF Replenishment Act, introduced by a bipartisan group of lawmakers in June, calls for an additional $60 billion in funding to be directed to the SBA for the purpose of replenishing the restaurant rescue fund. 

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