Class Action Aims to Recover Restaurant Revitalization Fund Money Rescinded from Priority Applicants

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The federal government faces a proposed class action that alleges money from the Restaurant Revitalization Fund (RRF) that the Small Business Administration (SBA) assured would make it to certain priority applicants never did, leaving some bars and restaurants in “a significantly worse position” amid the COVID-19 pandemic. 

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The 13-page case in the Court of Federal Claims explains that the American Rescue Plan Act of 2021 authorized the SBA to administer grants from the newly created RRF to aid restaurants, bars and other businesses that serve food or drinks to remain open or reopen. Per the suit, the American Rescue Plan Act appropriated to the RRF $28.6 billion, which was to be awarded to eligible businesses. 

According to the case, the RRF online application portal opened in early May 2021, though in the initial 21 days of the program, applications from only a designated priority group—restaurants or bars majority-owned by women, veterans and/or socially or economically disadvantaged individuals—were to be processed. 

The lawsuit alleges that although the SBA promised priority applicants in writing that their awarded funds were on the way—that, in fact, funds would be disbursed within three to seven business days of approval—they were not. In the end, the money “never made it to” approved restaurants or bars, the filing says. 

Per the complaint, around June 23, 2021, approved priority applicants began to receive a standardized written notice in which the SBA advised that the awarded RRF funds would be “rescinded,” ostensibly due to orders in lawsuits in Tennessee and Texas that deemed the 21-day priority application window unlawful. 

“However, based on the timing of their applications, Plaintiff and Class members should have received an award even under the orders in those lawsuits,” the suit argues.

To date, the SBA has offered no further indication to proposed class members of whether it may award the promised funds, the case states. The plaintiff business was set to receive nearly $170,000 in much-needed funding before the award was rescinded by the SBA, according to the complaint. 

“Plaintiff was put in a position where it had to borrow money from the SBA in order to stay in business throughout the coronavirus pandemic,” the lawsuit shares. “Plaintiff received a $382,100 Economic Injury Disaster Loan that it must now pay back to the SBA.” 

The plaintiff business seeks, among other damages, the disbursement of the RRF funds promised by the SBA. According to reports, more than 2,900 businesses owned by women, people of color and veterans were deprived of RRF money promised to them by the SBA. 

The lawsuit looks to cover all persons and/or entities who applied for Restaurant Revitalization Fund grants as priority applicants, were told by the SBA that their priority applications were approved and that awards would be disbursed, and who did not receive their money as a result of the United States government’s failure to pay the awards. 

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