Initial state aid payments for businesses that will be sent out soon won't help some Minnesota restaurants struggling with the latest round of COVID-19 restrictions because of how they fared when regulations were loosened earlier.
The Minnesota Department of Revenue expects between 4,800 and 5,600 businesses to qualify for checks that will range from $10,000 to $45,000 depending on how many people they employ.
“We know some of these businesses are just hanging on by a thread. So we are working to make sure that we can get these out as quickly as possible,” said Revenue Commissioner Robert Doty. “We need to make sure the distribution is as accurate as possible as well.”
The payments will only go to Minnesota-owned establishments — taverns, caterers, gyms and bowling alleys among them — that saw a 30 percent drop in taxable sales between April through September compared to the same period last year.
It has restaurants like Smith Coffee and Cafe in Eden Prairie right on the cusp.
A spacious patio, big yard and a special service window fueled a bit of a rebound when COVID-19 restrictions lifted in the spring. Owner Ann Schuster said she had room for 100 customers at a time outdoors even with spacing requirements.
“We had the walk-up window plus outside. That’s what people wanted all summer,” she said. “So we did great there.”
While Schuster said she supports the rationale behind the state’s restrictions to slow the spread of COVID-19, this latest shutdown on indoor dining has been more of a slog for her. Some hearty customers are braving the cold and snow to sit outside, but not many.
“Typically this week before Christmas our space would be packed with people,” she said in an interview last week.
Schuster’s revenue for the year is now down about $200,000. She was hopeful when a state relief bill passed a couple weeks back. But lately she's been fretting that her decent summer will wind up costing her a check.
“The aid would make a really big difference. We are hovering right at that 30 percent threshold,” Schuster said. “But we’re down more than that during this period where we’re shut.”
Molly Luther, who operates the Good Life Cafe in Park Rapids, is in a similar predicament.
An expansion she undertook in 2019 wound up helping accommodate the extra spacing between customers that became necessary when COVID-19 hit. But that construction also suppressed the 2019 sales pivotal to the state’s aid calculations.
“It’s artificially low because I was closed for construction for six weeks,” Luther said.
And using summer sales in the tourism-friendly town will also work against her.
“We killed it last summer,” Luther said. “We put a huge tent out front. We followed all the rules to maintain the trust and the respect of our community and they responded extraordinarily well.”
Luther also said she trusts the decisions made by state political and health leaders. COVID-19 safety information is prominently posted on the restaurant’s website.
But business on the city's Main Street is slower now.
“It’s not as profitable to be open just for takeout,” she said.
Carol Valentini, who runs the northeastern Minnesota Italian restaurants her family first opened 87 years ago, also worries that places in need of help now will miss out.
She said her region saw a surge of traffic as people flooded to the area to escape the Twin Cities after the first partial lockdown ended. That helped boost business at restaurants like hers in late spring and throughout the summer — the heart of the lookback period for the state.
“I think that’s skewed. I think we need to look at December,” Valentini said. “December is the busiest month of the year for any restaurant and that isn’t even included in the numbers.”
Doty said state lawmakers and Revenue officials didn’t want to set a window that was too narrow or too broad, but also had expediency in mind when they wrote the rules. That’s why they used two quarters worth of sales data, ending with the latest completed quarter that closed after September.
“Criteria that will allow us to get these payments out as quickly as possible,” Doty said. “We needed that criteria to be as straight-forward and uniform across the board as we possibly could.”
State Sen. Eric Pratt, R-Prior Lake, was a chief author of the $216 million aid package. He said there’s another good reason for setting a sales falloff standard in determining who gets a check.
“The whole point of that was to make sure that we weren’t sending checks to the franchises where takeout is their wheelhouse,” Pratt said. “The McDonalds, the Taco Bells.”
Those that miss out on help can apply for state supplied grants being administered through each of the 87 counties — a pot of total aid that will exceed $114 million. Movie theaters and convention centers can access a separate fund.
Pratt said it’s possible for a business to draw from multiple streams of assistance.
“Just because you’re not getting a Department of Revenue check doesn’t mean there’s no aid for you," he said.
The Department of Employment and Economic Development has been working with counties to get their aid programs up and running. And Commissioner Steve Grove said movie theaters and convention centers can apply for the special program tailored to them beginning Jan. 5.
“A lot of fast action here because we know that speed is the most important part of that package given how challenging things are for some of these businesses,” Grove said.
The state relief bill also extends unemployment benefits for people who have been out of work for a long time because of the pandemic. They’ll qualify for benefits through early April.
With the continued ban on indoor dining, the Good Life’s Luther didn’t even bother to stay open for about two weeks around the holidays. It's unusual for sure but she’s looking at the upside in giving her staff a breather.
“It’s something we can do for the employees to give them a little headspace and help them feel like this is a crazy year and if there’s anything good we can do, we can be with our families,” she said.
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