Chief Michelle posts started the year strong at Bastille Brasserie & Bar in Alexandria. She and her partner / husband Christophe had just remodeled their French dining room and were seeing some of their best deals in a long time. It all came crashing down as coronavirus restrictions shut down food service. The 29 people of Poteaux number only nine or ten people. Income has fallen 75 percent. The owner of the restaurant does not offer any breaks.
“I really have a hard time balancing the stress between what my kids need and what the restaurant needs,” says Poteaux. “I’m fine for about two days, then find out I’m having a seizure. I am angry, I cry. I want to give up, it’s just not who I am.
Among the potential lifelines that Poteaux relied on was the new paycheck protection program (P3), which provides small businesses with loans to maintain their payroll. The loan can be canceled, essentially becoming a free grant, if 75% of the money is returned to employees for at least eight weeks. (The rest can be used for expenses like rent and utilities.) Otherwise, there’s a 1% interest rate. Congress created the program as part of the $ 2 trillion economic bailout bill to help prevent layoffs.
But after a difficult deployment, the program’s $ 349 billion was used up in less than two weeks. While the huge chains behind Ruth’s Chris Steak House and Potbelly have received tens of millions of dollars, many small independent DC-area restaurants like Bastille have been left behind. Congress is expected to approve additional bailout funds shortly, but Republicans and Democrats have clashed over the details. Even when the money is available, the banks predict that it could be depleted again in as little as 48 hours. It can also be too little too late for businesses that are sticking to the day.
Posts says she hasn’t heard a word from United Bank since submitting her loan application, despite frequent follow-ups.
“Nothing, nothing, nothing, and then of course there is no more money. I don’t even know if our package has ever even been submitted, ”she said. “I know someone who had it. None of my industry friends. This person turned out to be my dad who is an auto mechanic in Missouri.
Firms in DC, Maryland and Virginia collectively received about $ 16.5 billion, or 5% of the total loan amount approved by the Small Business Administration. In DC, only 3,253 loans totaling $ 1.25 billion have been made.
Who got the money and who had little to do with banking relationships and “some luck,” says restaurant accountant Matt hetrick, whose firm CPA Eats has helped with nearly 80 PPP applications.
“95% of the banks were garbage. It’s been a very, very frustrating few weeks, ”says Hetrick. “All the big banks have done nothing to help their customers. “
But it wasn’t just the big banks. In particular, Hetrick — with several operators Washingtonian who we spoke to – were frustrated with the benchmark lender for DC restaurants: EagleBank.
“They had a lot of the restaurant community in their bank, but in terms of getting those loans and helping people, that didn’t happen,” says Hetrick. He is only aware of “maybe one or two” PPP loans approved by EagleBank. In many cases, he says, bankers have simply fantasized.
“Shit the bed would be a polite way to put it,” Hetrick said. “Personally, I really like some of the people we work with at the senior level, but they did a really bad job of helping anyone and weren’t communicating at all. “
EagleBank declined to say exactly how many applications it received, how many loans it approved, or how much money it distributed.
“Since the opening of the application process, thousands of clients have responded with inquiries. Due to the huge interest and extraordinarily high volume of requests received by the Bank, not all requests were processed in sufficient time to qualify for the first round of PPP financing, ”the bank said in a statement. press release sent by email. “The Eagle teams have worked tirelessly to move the applications forward and continue to do so for a new round of funding. “
An e-mail obtained by Washingtonian from one of EagleBank’s senior vice presidents to clients offers a more candid perspective. “These were the toughest days of my career and we haven’t had the number of success stories we would have liked,” the post read. He later continues, “At this point, I’m sure most of your trust in EagleBank has taken a serious hit and I don’t blame anyone for those feelings.”
While the banker says they are working “day and night” to rectify the situation, he adds that he cannot guarantee funding for the next go-around and recommends that “everyone go to another institution. financial as a back-up plan. “
The founding restaurant group Farmers was among those who applied through EagleBank and did not receive a loan. Owner Dan Simons says he is “confused and disappointed” with the lack of communication and the outcome.
“I definitely let myself believe emotionally that we were getting it,” Simons says. “It seemed so reasonable, and because we are rehiring people and creating jobs. We’re in the fight, so that’s supposed to be exactly what the money is for. “
Simons transforms its restaurants into online grocery stores in addition to offering take-out and delivery meals. The company initially laid off 1,100 people, but has brought back 200 so far. With a P3 loan, Simons says he could double or more his rehire rate. “The flexibility that a PPP loan gives you is that you don’t have to panic,” he says.
As it stands, Simons says stores have a chance of being at “60% or 80% or more of their previous sales volume.” But he’s hesitant to make it look good, especially since a hard-to-use location like National Harbor is down 97%. Meanwhile, Simons juggles money to figure everything out. Last week, he put $ 50,000 on his personal credit card for a “truckload” of hand sanitizer ingredients so he could sell the product to the DC government for frontline workers.
“I try not to scare my kids, but at the same time my kids need to understand that mom and dad don’t make money. We haven’t made any money since February, ”says Simons. “I don’t know exactly when we’ll be paid again.”
Chief Kevin Tien expected the worst from PPP, and therefore for him, the government and the banks did not disappoint. He applied for loans for his popular Capitol Hill restaurant Emilie’s (via EagleBank) and his Fried Chicken Sandwich in Arlington Hot Lola’s (via Chase). Neither received any funds.
“I don’t know anyone who has had it,” he says. “I have friends across the country who have their own businesses that are like our restaurants – small, independent – and I haven’t heard from anyone who got it.”
Tien considers himself lucky that both restaurants are breaking even with take-out. At Emilie’s, he kept 24 of his 67 employees on the payroll, and everyone continues to receive health benefits. But even though he got the PPP loan, Tien says it doesn’t do much for restaurants now.
“It’s like the Titanic has hit an iceberg, but you’re just trying to fix it with a little bandage,” he says. “It’s not going to fix the ship. We need something that’s going to be real and long term to help us.
To begin with, the money must be used within eight weeks of receiving it. “This whole situation is not going to end in eight to ten weeks,” he said.
While the program ensures that workers are paid now, Tien and other restaurateurs find this problematic because it forces them to keep people employed when they aren’t even allowed to fully open. Many fear that they will have to lay off staff again at the end of the eight weeks and that they will not have the resources when it comes time to reopen to stay open.
The Independent Restaurant Coalition, a group lobbying Congress to save restaurants, is pushing for the stopwatch to use the funds when restaurants are allowed to be fully operational. They also want to extend the maximum loan amount to three months after restaurants can legally reopen at full capacity.
For now however, it supplies restaurateurs like Chef Geoff’s Geoff tracy with some much needed respite to understand the next steps. Tracy was not even informed of the approval of her PPP loan by United Bank. The money suddenly appeared in the company’s account. When his brother and business partner Chris Tracy called to tell him the news, he thought it was to say that they had no more money. “I was like, ‘Holy shit, this is amazing.'”
Tracy currently has 50 people on her payroll at Chef Geoff’s and Lia’s. Thanks to PPP, he is hiring 150 to 180 more this week. Tracy knows he will pay some people to stay at home, especially since restaurants are not operating at full capacity. For social distancing purposes, he wouldn’t want everyone in restaurants anyway. But a lot of people want to work, so he’s creating all kinds of new positions to capitalize on the funds.
For starters, Tracy will be opening Chef Geoff’s pop-up kitchens at two other restaurants he owns, Cafe Deluxe in the West End and the Tortilla Coast in Capitol Hill. He hired a former general manager as director of security and sanitation. He hires people for delivery, IT, pantry sales, donations, catering, shopping, pasta making, and crafts. He hires “customer service” workers to run free groceries or collect drugstore prescriptions for some of the older restaurant patrons. He even hires people to help with hiring.
“Even though the restaurant doesn’t have a lot of sales, at least I give people a paycheck,” says Tracy.
Still, Tracy is well aware that this is a temporary reprieve. Even when his restaurants can fully reopen, he says there’s no way 200 people will suddenly arrive on a Friday night.
“It’s scary to think of six months. It’s scary to think of 12 months. And it’s scary to think about it in two years, ”says Tracy. “The restaurant apocalypse has struck.”