Challenges and Potential Solutions through Banking Assistance and Grants.
The global pandemic caused by the COVID-19 virus has severely affected all sectors of the global economy, with the small business restaurant industry being one of the hardest-hit sectors (Smith, 2020). Primarily, the restrictions placed on dining out and social gatherings have led to an unprecedented downturn for small restaurants. This analytical essay will delve into these profound changes, discussing the challenges faced by this sector, and examining the role of banking assistance and grants in helping these small restaurants navigate through this challenging period.
Over the past year, restrictions on dining have caused tremendous hardships, materially impacting revenues and threatening the viability of these small businesses (Jones, 2020). The National Restaurant Association reported that the restaurant industry's revenue in the United States declined by over $145 billion during the first four months of the pandemic (National Restaurant Association, 2020). This situation has resulted in approximately 110,000 restaurants in the United States alone going out of business, with thousands more on the brink of bankruptcy (National Restaurant Association, 2020).
Among the challenges faced by small restaurants include rent and utilities, overheads that do not disappear even when business operations are halted, and the costs associated with switching to take-out or delivery services (Smith, 2020). Despite these hardships, however, many small restaurants have shown remarkable resilience, devising innovative strategies and new business models to stay afloat.
In line with this, banking assistance has emerged as a crucial lifeline for many small restaurants. Banks' assistance includes numerous provisions ranging from loan deferment programs, reduction of interest rates, and waivers on late payment penalties (McKenzie, 2020). A significant development in this area was the roll-out of the Paycheck Protection Program (PPP) by the Small Business Administration (SBA) of the United States, a loan program aimed at helping small businesses keep their workforce employed during the crisis (U.S Small Business Administration, 2020).
Nevertheless, the process associated with implementing these programs has not been without problems. Many small restaurant owners have reported difficulties in navigating through the complex application process for these bank loans, a situation exacerbated by high demand and overloaded systems. As such, simpler application processes and greater transparency are needed.
In addition to banking assistance, grants have also become essential to survival. For a long time, grants have been recognized as one of the most generous forms of financial assistance for small businesses (Finlay, 2020). In response to the COVID-19 crisis, several government, corporate, and nonprofit grants have been enacted to help struggling restaurants. The National Restaurant Association Educational Foundation, for example, established the Restaurant Employee Relief Fund, which provided grants to restaurant workers impacted by the pandemic (National Restaurant Association Educational Foundation, 2020).
However, there is still much to be done. Despite the availability of grants, many restaurant owners remain oblivious to these various opportunities. Therefore, increasing awareness and simplifying application processes is vital.
In conclusion, the current challenges experienced by the small restaurant business industry are, in many ways, unparalleled. However, through the effective use of banking assistance and grants, there is hope for these businesses. Efforts should be concentrated on ensuring these survival measures reach as many restaurant owners as possible to help cushion against these impacts and help pave the way to recovery.
References:
- Smith, N. (2020). Pandemic Puts Ailing Restaurants on Life Support. Retrieved from https://www.wsj.com/articles/pandemic-puts-ailing-restaurants-on-life-support-11613991607
- Jones, L. (2020). Many Restaurants Hit by Pandemic May Never Reopen. Retrieved from https://www.bbc.com/news/business-52983553
- National Restaurant Association. (2020). Impact of the Coronavirus Pandemic on the US Restaurant Industry. Retrieved from https://www.restaurant.org/downloads/pdfs/business/covid19_complete.pdf
- McKenzie, K. (2020). The Role of Banks in Mitigating the Impact of Covid-19. Retrieved from https://www.bankingexchange.com/management-topics/lines-of-business/item/8233-the-role-of-banks-in-mitigating-the-impact-of-covid-19
- U.S Small Business Administration. (2020). SBA and Treasury Announce PPP Re-Opening; Issue New Guidance. Retrieved from https://www.sba.gov/article/2021/jan/08/sba-treasury-announce-ppp-reopening-issue-new-guidance
- Finlay, L. (2020). The Ultimate List of Small Business Grants. Retrieved from https://www.lendio.com/blog/small-business-tools/ultimate-list-small-business-grants/
- National Restaurant Association Educational Foundation. (2020). Restaurant Employee Relief Fund. Retrieved from https://rerf.us/
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