LOS ANGELES — Area restaurant owners are fighting for their survival as plummeting sales caused by customers complying with stay-at-home orders brought on by the coronavirus crisis have cut into sales.
Los Angeles and smaller area cities are scrambling to cushion the pandemic’s economic blow by banning commercial evictions, easing access to low-interest loans and helping businesses getting sanitizing supplies and hospital masks for workers preparing takeout food for sale.
Los Angeles has temporarily prohibited businesses from being evicted and has assembled an emergency loan program for micro and small businesses impacted by the disease, with the goal to support those enterprises and keep staff from being laid off.
Mayor Eric Garcetti said microloans run from $5,000 to $20,000, and have repayment options from zero to 3% interest rates on contracts stretching from 18 months to five and 12 years.
The loans are for nonprofit and for profit businesses with 100 of less workers “that have been negatively impacted by the COVID-19 outbreak,” and plan to continue or reorganize their operations with the same employees.
The city’s business website link indicates that to obtain the emergency funds restaurateurs should file an application with a copy of the latest business and owner’s tax returns, business and owner’s personal financial statements, three months of bank reports and an itemized list of the fund’s expenditures.
“I am the first mayor in a large city to implement a moratorium on evictions” until the city lifts its state of emergency, Garcetti told Larry Mantle on radio station KPCC’s “Airtalk” show last week.
Under Garcetti’s order, commercial tenants would have three months after the end of the emergency to pay overdue rent. The city council wants to strengthen the provision and extend it up to 12 months for repayment when it reconvenes in April on a teleconference session.
State law states that municipalities cannot intervene to impede court notices on commercial evictions, but Gov. Gavin Newsom issued an executive order giving certain powers to mayors to contain a possible barrage of legal actions for unpaid leases.
Newsom ordered a 60-day delay for eviction orders served to residential tenants until May 31, required leasors to notify landlords with seven days in advance of due payment their inability to cover rent to loss of income related to COVID-19, but did not defer payments.
Following suit, some cities in southeast Los Angeles County are cobbling their own support packages to help restaurants and other businesses cope with the economic fallout, despite landlord pressure to devise programs that also address mortgage payments to banks if cash from leases stops flowing.
On March 25, the Commerce City Council approved a resolution placing a moratorium on evictions for commercial and residential tenants impacted by the illness. The resolution requires documentation of each case within 30 days after rent is due and rent repaid with no interests when the emergency is lifted.
In Downey, Mayor Blanca Pacheco floated the idea to extend a city moratorium on evictions to avert more turmoil, but the City Council must discuss it before voting on it.
Downey Chamber of Commerce President Michael Calvert said he ran an informal survey of about 30 restaurants, and owners told him they worry about the lack of sanitizing supplies to keep them open while preparing take-out food orders.
“Now we are focusing on health supply of items to get by,” Calvert said. “From a survival standpoint is what we need in the next few weeks.”
He said private banks are better armed to create financial packages to prop up struggling business and suggested restaurateurs should renegotiate pending debt to get lower or zero interest rates.
Calvert added many corporate commercial landlords in Downey are responsible entities and expects they will negotiate with tenants who have invested lots of money to open and operate their restaurants.
“Look what happened to El Pescador,” Calvert said. “They rented the building, refurbished and turned it into a nice place that recently opened. I don’t think the [landlord] would want to lose this tenant.”
From a management perspective, Calvert said to get a loan and sail over unchartered waters would add more pressure to restaurants in the long run, because owners could be forced to pay it with similar revenues levels they earned three or four months before the pandemic was declared, in addition to covering overhead costs.
However, one thing is certain: as the coronavirus contagion curve moves uphill, restaurants are letting most employees go, allowing them to file for unemployment benefits.
According to Kristel Arabian, co-founder of the recently created California Hospitality Coalition, restaurants operate with razor-thin profits of 5 to 10%, and many “are shutting down for good.”
The coalition started an Instagram page, where resources to industry workers, including for those undocumented, can be obtained.
The District Surveillance Enforcement division of the Los Angeles County Public Health Department indicates that more than 26,000 restaurants and 1,200 food warehouses are inspected by the agency a year.
For its part, Paramount created a link to the state’s Employment Development Department on its website for restaurant or other workers who were laid off, furloughed or saw cuts on hourly assignments to apply for unemployment benefits.
In addition, the city posted links to the Small Business Administration page with information on the recently approved $337 billion disaster relief package that creates low-interest loans for businesses hit hard by the pandemic. The money was authorized as part of the $2 trillion financial rescue package assembled by the federal government last week.
The SBA loans come with up to $10,000 advances on loans for up to $2 million to shore up the temporary lack of revenue for businesses usually with less than 500 employees. If the funds are approved, the loan advance is forgiven.
“SBA is strongly committed to providing the most effective and consumer focused response possible to assist California small businesses with federal disaster loans,” SBA administrator Jovita Carranza said. “We will be swift in our efforts to help these small businesses recover from the financial impacts of the coronavirus.”
The city of Lynwood passed a commercial evictions moratorium during the emergency and issued a six-month period after the city cancels the order to pay nondeferred rent if the postponement is related to COVID 19.
Whittier also enacted a commercial evictions moratorium through May 31, and South Gate suggested restaurants contact the L.A. County Business Development Services to receive assistance if they lay off bartenders, cooks, cashiers or other staff.
Norwalk’s website linked resources to the California’s Small Business Finance Center through its iBank assistance program to 80 to 95% SBA-guaranteed loans to businesses injured by the virus spread with no more than 750 workers, to try and retain them and support missing income streams. Loans are as large as $20 million.
Huntington Park advised workers and employers to contact the state’s Department of Labor and Workforce if closures or cutbacks are experienced, while Maywood directed business owners to the SBA and the Los Angeles County’s Department of Consumer and Business Affairs.
By Alfredo Santana