ASHEVILLE - A stimulus program set up to triage the damage to small businesses and their employees ran dry Thursday morning, leaving many independent restaurateurs wondering how they'll recover from the COVID-19 crisis.

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As of April 16, the Small Business Association isn't accepting new applications for the Paycheck Protection Program part of the CARES Act, citing a "lapse in appropriations."

Still, that didn't stop steakhouse chain Ruth's Chris from loading up on more than $20 million in SBA loans before they disappeared.

There's not even a silver lining in that locally, since all of the money went to the chain's corporate restaurants, with none reaching the Asheville franchise location and its 60 employees.

That's according to Jeff Conway, whose group Asheville Prime LLC owns the Biltmore Village restaurant, which now maintains only a skeleton crew to handle takeout orders.

"For the record, we have not received any PPP funds," Conway said. "We are certainly trying, but it appears the program is busted at this point."

Many restaurant owners, Conway included, say the PPP doesn't address their industry's unique challenges, anyway.

"PPP was created as one size fits all, and it doesn't work for restaurants," said Cúrate chef-owner Katie Button, who closed her restaurants in March and laid off 130 workers.

That's because to take full advantage of the loan's forgiveness program, rendering it essentially a grant, businesses must use 75% of it to cover payroll costs while maintaining staffing levels at 100% or more of pre-COVID numbers.

Only up to 25% can be spent on rent, utilities and other operating expenses.

After approval, businesses only have 8 weeks until the loan expires. Locally, that expiration would likely come while dining rooms are mandated closed, meaning restaurant owners would have to pay employees to not work.

Any portion of a loan that can't be forgiven must be repaid over two years.

Button was recently approved for a PPP loan, but she's still praying essential tweaks to the terms will come through.

If Congress can't get money to restaurants on terms that work for them, the future of food service looks grim.

"We will not make it if the aid doesn't change," Button said. "That's just a fact."

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Loan terms don't help restaurants

Amber Arthur recently learned she'd been approved for loans for two of her five small businesses: PennyCup Haw Creek and PennyCup downtown.

"I actually cried," she said. "I immediately called my business partners, and we rejoiced. We thought this was going to be our saving grace, allowing all bills to be up to date when it was time again to reopen. Well, we were wrong."

She said the eight week timeline for businesses to disperse nearly all of the funds to full-time employees has rendered the loans essentially useless for restaurants, especially those in states with stay-at-home orders.

And until the "curve is flattened" and a significant number of COVID-19 tests are available, she said, it seems like too much to ask employees to potentially expose themselves to the virus just so she can take on more debt.

Unemployment benefits cover her employees' financial needs to a degree, allowing them to shelter safely in place.

"Should I ask my amazing, hardest working general manager to ditch her unemployment and come back to work, risking her health and her daughter's?" Arthur asked.

Not only does she worry that the SBA's requirements will force businesses to open doors prematurely, potentially releasing a second wave of COVID-19, she also thinks the bill blatantly neglects working parents.

"Both (my manager) and I have children," Arthur said. "How are we supposed to work when school is closed and camps and childcare are not an option?"

After local governments approve restaurants to reopen, it may be months before people will go out to eat at the same levels.

The Buncombe County Tourism Development Association projects no hotel tax revenue through June, then about 20% of last year’s total in July, 30% in August, 40% in September and 50% in October.

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Button said local restaurant owners can expect similar numbers.

"And if we tried to operate with 100% full-time employees on day one with 20% revenue, it would immediately bankrupt the restaurant industry," she said.

Melissa Gray, whose River Arts District restaurant RosaBees is still open for curbside takeout, said she hasn't yet applied for the loans for that reason.

"I’m in no rush," she said. "The eight-week guideline doesn’t work for us, because who knows when we will (fully) open."

'We need more than just payroll'

Survey data released April 16 by the James Beard Foundation and the Independent Restaurant Coalition found that, of 1,400 independent restaurants, 38% have closed temporarily or permanently.

Nearly half of respondents ranked the slow return of customers as the biggest challenge to reopening

More than half say they have taken at least $50,000 in new debt as a result of COVID-19, which is why they don't need to take on more.

Restaurant owners also said paying rent and reimbursing vendors would be bigger challenges to reopening than fulfilling payroll.

"What makes the restaurant industry different and unique is that our inventory is highly perishable," Button said. "We need more than just payroll."

When Cúrate and sister restaurant Button and Co. Bagels closed, that inventory was given away to staff.

But the restaurant still has to pay for it. Some of invoices still need to be paid before distributors will bring more food.

And the cost to fully stock the larders of a long-closed restaurant? "It's not a small amount of money," Button said.

Button said the restaurant industry cannot restart without capital to help restaurateurs adapt to the new normal.

"What restaurants have to do is create a whole new business model and way of working that gets us from where we are now to when a vaccine is available," she said. "We're smart, but we can't do it in eight weeks."

Restaurants employ 11 million

The intricacies of running a restaurant are many and complicated, and Button doesn't expect Congress to understand them all.

But it's important to try, since independent restaurants employ more than 11 million nationwide.

She's not alone in hoping Congress makes fixes to funding in the next round of federal relief.

In a letter to Congress last week, signed by over 25,000 chefs and restaurant owners, the Independent Restaurant Coalition said the PPP was “written in such a way that prevents restaurants from taking advantage of the program’s benefits.”

Still, independent restaurants don't have the same clout as the big chains and need the general public's help to get aid that works.

"We need them talking about it, asking senators and representatives, telling them how important this is to them," Button said.

To do so, visit www.saverestaurants.com/take-action to ask your representatives to change PPP requirements to work for restaurants, she said.

Button hopes a flood of emails can show officials voters care about the future of independent restaurants.

"The system works if you use it," she said. "Maybe. It's worth a shot. I have to hold onto something."

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Mackensy Lunsford has lived in Asheville for more than 20 years, and has been a staff writer for the Asheville Citizen Times since 2012. Lunsford is a former professional line cook and one-time restaurant owner.

Reach me:mlunsford@citizentimes.com.

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