Fiachra O’Shaughnessy, the manager of McTeague’s Saloon on Polk Street, shook her head in disbelief as she recounted the Government’s failure to make her business full since its prolonged closure during the Covid emergency.
The bar was one of more than 60% of applicants for the $28.6 billion Restaurant Revitalization Fund (RRF), a federal relief pool for restaurants created in March 2021, which got nothing from the program. O’Shaughnessy received money from the old Paycheck Protection Scheme, but the mandatory closures for bars – combined with a caveat that a certain amount must be spent on wages – meant that more d A quarter of the $220,000 McTeague had in federal PPP money wasn’t forgiven. The bill expired in June as the bar continues to limp around 40% of pre-pandemic levels, O’Shaughnessy said.
As hopes for additional federal aid dwindle, so does the money from the $750,000 economic disaster loan the bar took out to weather the pandemic. McTeague’s story is emblematic of a latent debt crisis that threatens to boil over and wipe out a host of small businesses in San Francisco.
“There are so many people in the same boat as us,” O’Shaughnessy said. “Then there were people who made an even bigger mistake, people who got a second loan for their house. They’re going to have an even harder time with that.
SF New Deal, a nonprofit created during the pandemic to support the city’s small businesses, has released new research on how the growing debt burden, the result of more than two years of housing hurdles the pandemic is hampering the recovery.
Among other efforts, the nonprofit launched a $1 million grant program to provide 400 businesses with $2,500 grants, targeted at underrepresented operators and those with five or fewer workers. . A follow-up survey of these recipients found nearly a quarter had at least $150,000 in debt, with 12% owing more than $300,000 to their creditors. Thirty-seven percent of small businesses surveyed identified debt accumulation as their biggest challenge.
Rising interest rates are making a bad situation worse as small businesses struggle with higher debt levels combined with inflation-based asset price increases. In response, the report calls for increased funding for relief measures such as grants and tax credits, as well as accounting, legal and other support.
Laurie Thomas, executive director of the Golden Gate Restaurant Association, said that without additional help, a wave of personal bankruptcies and even foreclosures — for those who used personal loans to get by — is almost inevitable.
“Restaurants and similar businesses are very much like weddings,” Thomas said. “They may be beautiful from the outside, but you have no idea what’s going on beneath the surface.”
Kevin Truong can be reached at [email protected].