North Texas Restaurant Owner Questions Why Larger Chains Received SBA Loans & He Didn't

UPDATE: Dallas Restaurant Owner Russell Birk Says He's Eligible For PPP Loan To Be Forgiven

DALLAS (CBSDFW.COM) — Russell Birk said Maya's Modern Mediterranean in Dallas specializes in healthy, fresh and simple food.

"Anybody that's walked into my restaurant with me in here knows how much I love my guests and how much I love my food," Birk said.

But because of the COVID-19 outbreak, the owner and chef said he's worried about his restaurant's financial health.

"It'll pretty much wipe me out if we can't get going again," Birk said.

He said his business has dropped by 20%, and that while it may not sound like a lot, he said it is when you consider how tight the profit margin is in the restaurant industry and that his restaurant has only been open for a year and a half.

Birk said he applied for a loan from the Small Business Administration's $349 billion dollar Paycheck Protection Program weeks ago.

But like many others, he never heard whether he would receive a dime, before the program itself ran out of money.

"I really thought that money would be coming shortly afterwards because I had all of my ducks in a row," he said.

Birk said he's gone through his life savings to pay his 14 employees, and that he hasn't had to lay off any of them.

But what really gets Birk steamed are reports that larger corporate chains such as Plano-based Fogo de Chao and Ruth's Hospitality Group — which operates Ruth's Chris Steakhouse — each received $20 million dollars in SBA loans.

The SBA says under the CARES Act, any single business entity with 500 or fewer employees could qualify for a loan up to $10 million dollars.

The agency says a provision allows chains to apply for loans for each of its subsidiaries or its individual restaurants, paving the way for Fogo de Chao and Ruth's to receive the money.

Birk said these and other restaurants should not have been eligible for the SBA loans.

"I don't get why the government would allow it when a guy like me is going to go out of business, and there's a lot of guys like me, a lot of people like me," he continued.

In a statement, Ruth's Hospitality Group told CBS 11, "We will be following all guidelines set forth by the SBA in how the funds are being leveraged including payroll assurance for our team members in individual locations running our takeout and delivery business."

Fogo de Chao didn't return a request for comment.

Mike Davis, an economics professor at the Cox School of Business at SMU, said he believes some of the bigger companies need the money too.

"I don't care whether you're a 10 person restaurant or a thousand person restaurant chain, you're in big trouble right now. My concern is that it's not filtering down to the really small businesses, and those people are very strapped right now," he said.

When asked if there's a solution, Professor Davis said, "The only real solution is for Congress to step up and replenish that fund of money that's available to all small businesses."

The bill approved by the U.S. Senate Tuesday will include $60 billion for small, medium and community lenders. It's part of the $310 billion in new funding for the Paycheck Protection Program.

Another $50 billion will go toward the SBA's Economic Injury Disaster Loan Program or EIDL and $10 billion will go toward advanced payments. The U.S. House is set to vote on this measure Thursday.

Birk said he's looking forward to reopening his restaurant, even if that means doing so with half the number of tables he has now. The problem is, without getting a loan, he doesn't know how long he'll be able to stay open.

"I wish I had a number for that. I'd say probably 60 days at this point," he said.

Birk thanked the community for rallying around him but he says that alone still won't be enough without the government's assistance.

"That money is important to us," he said. "We will not survive without it."

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