New Restaurant Owners Not Eligible for City Loan Program Worry They’ve Been Forgotten

The city of Chicago’s Small Business Resiliency Loan Program — a new $100 million campaign instituted to help restaurants and other small businesses affected by the COVID-19 outbreak — has had about 4,500 applicants since the program launched this week, according to a city spokesperson.

Restaurant owners who have gone through the process told Eater Chicago that it’s a quick one, with questions about each business’ employee numbers and the amount of money the business has made and projects it will make in 2020. The program, which is funded through grants, pairs those approved for loans with outside lenders like Accion. Its website has hosted webinars for business owners and includes a FAQ to educate them — among other things, it reveals that undocumented citizens are eligible for loans.

However, the owners of restaurants that have opened this year worry they won't received aid despite making massive investments in their communities.

The application window is still open, and there’s no set deadline to apply. But to qualify for the program’s low-interest loans (which can be paid back over a maximum of five years) businesses need to have been open for at least a year before the application date. That means that restaurants like Harbor, which opened in January in the underserved South Loop, were never considered during the program’s creations. When Harbor’s owners applied for a loan, says partner Adam Ellis, “we didn’t get denied, we got disqualified.”

Ellis has stayed abreast of his options for aid via the Illinois Restaurant Association and Small Business Administration. Beginning Friday, small businesses like Harbor can start applying for loans through the federal government’s new Paycheck Protection Program.

About a week ago, Harbor shut down its carryout and delivery programs after having coronavirus concerns with two workers: one had started to show symptoms, while another has a spouse who is a doctor on the frontlines. The spouse tested negative. So the restaurant’s owners decided to close with the intention of relaunching next week.

While the questions on the city’s loan program application are supposed to let business owners demonstrate their need, Ellis feels they fall short of measuring that correctly. “Are we impacted by the coronavirus?” Ellis says. “Clearly, we are.”

Over in Avondale, Peter Shen, the owner of Sipping Turtle Cafe, says he put his life’s savings into his business, which he opened in February with his wife, Sarinporn Intongkam. But when Shen applied for the city’s loan he was quickly denied. On Tuesday, he shared his frustrations on Facebook, where he pointed out that although established business owners will often complain about an over-saturation of restaurants in Chicago, they have the advantage of building cash reserves. New restaurants like Shen’s, meanwhile, are still depleted by the city’s permitting process, which often forces owners to wait long periods of time for approvals before they can open. While Shen waited for his permits to be approved, he continued to pay rent. Since signing his lease in 2018, he estimates he’s sunk $120,000 into the cafe. Shen asked for a $50,000 loan, the maximum amount available through the program.

“I put all my life savings in just to open,” says Shen, who grew up in Chicago (his wife is from Thailand). “I don’t have a a year or two or three of savings to have a cushion.”

He wishes the city would provide more support. When Sipping Turtle was denied, Shen felt that the program’s rejection page didn’t provide enough guidance toward resources. And there appears to be confusion among city leaders. Despite the requirement that a business be open for at least a year, a city rep emailed Shen, telling him his cafe was likely denied a loan due to an eligibility requirement demonstrating at least a 25 percent loss or decline of profits. Shen says he didn’t expect to break even until year two or three of operations.

Rocky Gupta understands the frustration of newer restaurant owners. His father, David, founded Chef Luciano in 1982 near McCormick Place Convention Center, and it’s in part because of his restaurant 38-year history that he was given preliminary approval for a city loan. The restaurant specializes in takeout and delivery, so closing the dining room didn’t have a huge impact on day-to-day business; they didn’t need to come up with a new menu, for example. However, the stay-at-home order, which only allows for essential businesses to remain open, and has kept most well-intentioned people indoors, has hurt financially. Gupta estimated sales are down 50 to 60 percent.

Gupta hasn’t heard anything new from the city. Presumably, they’re checking on the financial status of the restaurant, seeing if Gupta has unpaid fines or tickets, before proceeding. He employs nearly 30 people whose hours he’s had to cut because of the pandemic, and says that a loan would help retain as many workers as possible. Still, Gupta’s aware that this is a loan, not free money. There isn’t a forgiveness provision that he’s aware of; the restaurant will eventually have to pay lenders back.

That’s why Gupta hopes the community support will continue, even when dining rooms reopen and the stay-at-home order is lifted. Restaurants may struggle finding their footing when they reopen.

“I feel like this an awesome rallying cry with neighborhoods supporting their local businesses,” Gupta says. “But I think, when it’s all said and done, and we’re back open, that people should remember that.”