When Mother’s Cantina co-owner Neely James found out several months ago that a federal grant program was prioritizing restaurant owners who were both women and veterans for relief funds, she immediately became hopeful.
A veteran of the U.S. Army and primary owner of the 28th Street spot, James thought she had finally found a realistic way to help pay off the $1 million in debt she accrued by staying open during the pandemic.
But to her disappointment, despite having her application ready 30 minutes before it was due and following up religiously with the U.S. Small Business Association about the status of the inquiry, James did not receive a grant from the $28.6 billion Restaurant Revitalization Fund.
“I am a veteran, and a woman. I’m in the priority, priority group,” James said of applying for a grant from the program, which handed out funds from early May until the money ran out on June 30.
“I’ve been asked to find other people in my situation. I can’t even find another woman, veteran restaurant owner in Maryland,” she continued. “I’m in a unique group.”
Now, as James continues struggling with running both the 28th Street restaurant and a newer sister location on 78th Street with her husband, Ryan James, the only hope is that the federal government will replenish the fund before the couple is forced to make a drastic choice.
“We’re obligated to keep up with our payments on our loans and what that means is that we are going to then find ourselves further in debt in the off season,” Neely James said. “We very well might have to close one location. Because if a location is staying open in the off-season, there is at least one location that is experiencing losses.”
The application period for the federal program opened on May 3 to provide direct relief to restaurants and other hard-hit food establishments that experienced economic distress and significant operational losses due to the pandemic.
The program provided restaurants with funding equal to their pandemic-related revenue losses up to $10 million per business and no more than $5 million per location.
And to help offset the reportedly unfair disbursement of other funds in the past, the program prioritized businesses owned and controlled by women, veterans, and socially and economically disadvantaged individuals.
According to the SBA, socially disadvantaged individuals are defined as “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.”
Economically disadvantaged individuals are classified as “socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired because of diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged.”
Those priority qualifications struck a chord with a business owner in Tennessee, who filed a lawsuit on May 12 stating, essentially, that the disbursement formula was unfair. A federal appeals court ruled in favor of the business owner, which James said may have had a hand in tripping up her application.
“The SBA reported that about 15 percent of the initial funds went to those priority applications, which is a good amount,” she said. “But also there were so many priority applications that if they had funded all of those priority applications the money would have been gone in a flick. That’s what brought on that lawsuit.”
She added that she does not fault other business owners for seeking funds, regardless of their statuses, as everyone is in the same boat.
“I do understand that we’re all in the same situation no matter what gender, what background,” she said. “So everyone did need help and I really do believe that there was a path to equitable funding. But I just believe that it wasn’t followed through correctly.”
And while James recognized the fact that she was in a priority group, she said she has never used her sex or status as a veteran to get ahead.
“I loved my Army career, I’m proud of the fact that I’m a veteran. I have never used my veterans benefits for any kind of priority financial gain, or anything else for that matter,” she said. “So with this I thought, well, in this moment, this is when I need the government’s help. As a veteran you say, ‘you know, this is the time I’m going to cash in.’ …This time I’m saying I really do need help and you can recognize the fact that I am a veteran and … help.”
The SBA did not break down the amount of money received from the program by counties or regions, only by states. According to the data, Maryland businesses received 2,024 grants for a total more than $561.8 million. A total of 5,386 applications were submitted across the state.
John Hickman, the regional director for the Eastern Maryland Region Small Business Development Center, said he could not speak to the lawsuit or the specific funding allocations, but he said he believes counties on the Eastern Shore received their fair share.
However he could not name any specific businesses in Worcester County that received grants.
Greg Shockley, owner of Shenanigan’s Irish Pub on the Boardwalk at Third Street, said via email this week that he applied for a grant but did not receive one.
“[I] was informed about 2 weeks ago that SBA had exhausted the funding … I do not know of anyone who received anything [from the] restaurant revitalization fund,” he said.
Paul Suplee, the owner of Boxcar40 in Wicomico County, as well as Boxcar on Main in Berlin, said he did receive one of the coveted relief grants — but only for Boxcar40. A veteran of the U.S. Marine Corps, he falls into one of the priority categories for the funds.
And while Suplee would not disclose the amount of money he received, he said it was in line with what he lost last year due to covid.
He added that the Berlin restaurant, which he opened in December, has not received any funding, and even if the location had qualified, it has been thriving and does not need it.
Hickman, and others, like members of the National Restaurant Association, have encouraged business owners to advocate for replenishment of the Restaurant Revitalization Fund. The bill that would fund it is currently held up in the U.S. House of Representatives with no schedule to move forward.
“Roughly a third of Marylanders were approved and there were people who didn’t even apply because they ran out of money before they could apply,” Hickman said. “So I think that that’s the path the industry is following ... to say there wasn’t an adequate amount of funding for the need.”
He added that owners who need funding can still apply for Economic Injury Disaster Loan funds as well.
“It’s a loan, it has to be paid back, it’s not as advantageous to these businesses as this grant, but there is an opportunity, particularly for larger companies that feel like they need more than they received, to ask for additional funding,” Hickman said.
James said her application for the federal grant moved high enough up the chain to learn that she was eligible for $785,000 in relief funds for the 28th Street Mother’s location.
This amount, she said, would have gone back to the SBA to pay off Paycheck Protection Program and Economic Injury Disaster loans she and her husband received to keep both restaurants afloat.
Ryan James pointed out that a portion of the money spent paid staff members more than they could feasibly afford, but with the pandemic taking a toll on everything, he and his wife wanted to do all they could to keep people employed and the restaurants running.
“Normal payroll is about 33 percent of your gross sales, we ran at 50 to 55 percent of our gross sales, in [the 28th Street] location, pretty much all of 2020 just to keep people working using the subsidies from the PPP loans,” he said. “That money’s gone now.”
The James’ added that summer 2021 has been good to them and they are optimistic about eventually coming out on top, but the high costs of services, staff struggles and covid debt are all taking significant tolls.
“We’re a family business, this is our community, and … we like to be transparent,” Neely James said. “The reason why our prices are high right now, this is the reason … I don’t think there’s anything to be ashamed of at this point, asking for help, for government funding, because restaurants really need it.”