Small restaurants, bars, hotels, and other hospitality-related businesses across the state have received a lifeline from the state’s new Hospitality Emergency Loan Program (HELP), which will provide no-interest loans capped at $10,000 per business per month.
The funds can cover rent, utilities and other unavoidable bills, but cannot be used for personnel costs. The loans have a 10-year term with payments deferred for nine months.
The state’s Division of Small Business will administer the program using existing state funds. Eligible businesses must have been in operation for at least a year, have annual revenue below $1.5 million and be in certain hospitality-connected industries.
Division of Small Business Director Damian DeStefano said the state is estimating that 55% to 75% of the 2,700 entities in Delaware under the applicable NAICS industry codes will be eligible (see below). Restaurants like Buffalo Wild Wings and McDonalds under one ownership group only count as one in the 2,700 number, DeStefano told the Delaware Business Times.
That means that most of Delaware’s more visible restaurants, bars, and attractions – particularly those with multiple locations – will not be eligible. They are laying off thousands of workers and deciding whether to stay open for takeout and/or delivery in the midst of a ban on dine-in service.
“This is a difficult situation for everyone,” DeStefano said. “We asked ourselves where $10,000 will make the largest difference. This loan will cover about 8% of average monthly revenue and may be what saves them from going out of business due to bankruptcy or eviction.”
Businesses applying for assistance through Delaware’s HELP program will need to meet eligibility standards, including being current on at least 80% of payments over the past 12 months and not being past due on its most recent payment of any bill for which it is applying for relief. Businesses can e-mail business@delaware.gov or call 302-739-4271 with additional questions or to check eligibility.
The state loan program announcement comes as the state also awaits official confirmation from the U.S. Small Business Administration that it has received the Economic Injury Declaration that Carney formally requested Monday.
DeStefano said he expects applications will be up on the division’s website within 24 hours, and that completed applications should be decisioned within a week. The loans will be issued on a month-to-month basis.
“Restaurants, bars, hotels, and other hospitality-related businesses, and their workers, are among those most seriously impacted by the coronavirus (COVID-19) in Delaware,” Carney said in a statement announcing the program. “We’ve limited restaurants to takeout and delivery services and asked all Delawareans to avoid being out in public unnecessarily. Many people from other states have postponed non-essential travel, meaning they are not coming to Delaware for vacations or business. We feel it is crucial that the state step in to assist these businesses and their employees.”
Delaware Restaurant Association President and CEO Carrie Leishman said of the HELP announcement, “The governor put this out with good intentions, but we’re afraid that it won’t help the majority of our members. It’s clear that he hears our concerns, but now we need to get the math right.”
Seeking to aid employees under other measures not covered by HELP, Carney approved changes to Delaware’s unemployment benefits program for the hospitality industry to include lessening the wait time on unemployment benefits to a maximum of a week; allowing part-time income while collecting benefits as long as employees can demonstrate their decreased hours and earnings; and not classifying tipped employees as minimum wage earners as long as their tips are reported as wages.
Restaurants and bars did get one additional piece of “good” news Wednesday when Carney issued a second modification to his emergency declaration allowing any restaurant, brewpub, tavern or taproom with a valid on-premise license to sell alcoholic beverages as part of transactions for take-out food, delivery or drive through food service. Alcohol sales cannot exceed 40% of the total sales transaction. All other rules and regulations regarding the take-out of alcoholic beverages apply, including that containers must be securely closed. Alcoholic beverages cannot be consumed on-site, neither indoors nor outdoors. The governor previously suspended liquor licenses.
To be eligible for the HELP assistance, the business must operate in one of the following four-digit NAICS industry codes:
- 7225 Restaurants and Other Eating Places
- 7224 Drinking Places (Alcoholic Beverages)
- 7223 Special Food Services
- 7211 Traveler Accommodations
- 7139 Other Amusement and Recreation
- 7131 Amusement Parks & Arcades
- 7121 Museums and Historical Sites
- 7113 Promoters of Performing Arts
- 7112 Spectator Sports
- 7111 Performing Arts Companies
- 4879 Scenic and Sightseeing Transportation, Other
- 4872 Scenic and Sightseeing Transportation, Water
- 4871 Scenic and Sightseeing Transportation, Land
- 3121 Beverage Manufacturing
- 3118 Bakeries and Tortilla Manufacturing
