‘Mom & Pop’ Shops Worry They Will Be Squeezed out of Small Business Coronavirus Aid

Family-owned restaurants fear they could be pitted against larger competitors, hotel chains and potentially investment funds in a race starting on Friday for a $349 billion pot of money the U.S. government will offer businesses hard-hit by coronavirus.

Enacted into law last week as part of a $2.3 trillion economic stimulus triggered by the outbreak, the program aims to keep small businesses on life support for at least the next two months.

The term “small business,” however, took on a new meaning when a 56-word provision was inserted into the 148,124-word bill that raced through Congress.

For certain small business loan purposes, the term typically refers to companies that employ fewer than 500 workers. But Congress and the Trump administration agreed to include large hotel and restaurant chains, as long as they employed fewer than 500 workers in a given location.

Now, private-equity firms, venture capital funds and other large investors are also angling for a piece of the action.

Some smaller restaurants worry they could be shouldered aside by well-connected corporate operations.

“Who needs the support most desperately – the Big Mac or the Small-Fry?” the management of The Eleanor restaurant in Washington wrote on Instagram last week.

Jared Bernstein, an economist at the liberal-leaning Center on Budget and Policy Priorities, said well-oiled bigger enterprises could get to the head of the line for loans that will be allocated on a first-come, first-serve basis.

“At the end of the day it’s going to be very hard to figure out how to help the smallest, most vulnerable businesses. We’re in a tsunami here and some people will get washed away,” Bernstein said.

Before Congress could even pass the economic stimulus, consultants advised clients to ready their applications for “forgivable” loans that can turn into grants if the money is used for payroll, rent and other expenses.

“We would advise consulting your own preferred lender now,” the Berman and Company public-relations firm wrote to clients on March 25, two days before President Trump signed the bill into law.