The National Restaurant Association on Monday sent a letter to U.S. Small Business Administration administrator Isabella Casillas Guzman asking for relief options for small restaurant operators who received Economic Injury Disaster Loans.
The EIDL program was created in March 2020 to provide a boost to small businesses that do not have strong banking relationships, and therefore might have had difficulty getting a Paycheck Protection Program loan. The loans had a 3.75% interest rate and a 30-year maturity.
As of August 2022, the program had distributed four million loans totaling $380 billion, and $800 million was remaining in the subsidy.
“As we know all too well, 90,000 restaurants closed due to COVID-19. Many of the restaurants still open today — particularly the 177,000 that were unable to receive a Restaurant Revitalization Fund grant — face an uncertain future,” said Sean Kennedy, executive vice president for Public Affairs at the NRA, in a statement.
“An inflexible EIDL repayment process will likely trigger a second wave of closures. Restaurants, their employees, their customers and the communities served will be forever changed if these small businesses begin to fail.”
There was an automatic 30-month deferral period for payments, but that window is closing and interest debt has been accruing. The NRA is asking the SBA to eliminate the accrued interest debt, and to lower interest rates to 1%, which is the interest rate on PPP loans.
The NRA is also asking for “good borrower” relief for hard-hit industries, including restaurants, which would encourage good borrowers to establish a repayment plan and make required payments for 10 years, after which the SBA would eliminate the remaining 20 years of EIDL payments.
In August, the NRA released a survey showing that fewer than 25% of restaurant operators with a loan about to come due would be able to make the scheduled principal and interest payments.
The NRA’s letter to the SBA can be read in full here.