The restaurant business faces unique challenges during "normal times" and have been severely impacted by the pandemic. The new Restaurant Revitalization Fund (RRF) was enacted as part of the recently passed American Rescue Plan Act (ARPA) and will provide $28.6 billion in grants to restaurants and bars that can show a loss of revenue in 2020 compared with 2019.
Almost All Restaurants and Bars Are Eligible to Apply
The ARPA explicitly states that the following types of establishments that can show the loss in revenue from 2019 to 2020 are eligible to apply: “restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products.”
Explicitly excluded from eligibility are restaurants and bars owned by publicly-traded companies, owned by a state or local government, and those owned by individuals or entities that operate more than 20 restaurants. However, owners of franchises that do not control more than 20 locations may be eligible to apply.
The Amount of Grant Funds is Determined by the Losses Claimed and Certain Eligible Expenses
The amount that applicants may be eligible to receive is likely going to be the 2020 gross revenue minus 2019 gross revenue with a limit of $5 million for restaurants operating all of 2019 and 2020 and $10 million for restaurant groups. If a restaurant was not operating for all of 2019, the maximum grant value is the average monthly gross receipts in 2020 minus the average monthly gross receipts in 2019. If a restaurant was not in operation for all of 2020, it could potentially receive a grant that totals the amount of “eligible expenses” put into the business to date. Grant funds will not be taxed like income. The “covered period” for what expenses can be paid by the grant must be incurred between February 15, 2020, to December. 31, 2021.
Grant Money Can Only be Used for Specific Expenses
The specific expenses that the RRF grants can be used for include:
Payroll costs.
Payments of principal or interest on any mortgage obligation.
Rent payments, including rent under a lease agreement.
Utilities.
Maintenance, including new outdoor seating construction.
Supplies, including PPE and cleaning materials.
Food and beverage inventory.
Covered supplier costs.
Operational expenses.
Paid sick leave.
The SBA will likely announce other expenses that it deems essential to maintain operations.
The SBA Has Not Announced a Launch Date, but Begin to Prepare
The SBA will administer and disperse RRF grants. The SBA has not yet announced a launch date, but applications will be received through the SBA website. Keep an eye out for dates and further eligibility requirements on the SBA’s COVID-19 relief options web portal. In the interim, begin preparing the paperwork that clearly shows your gross revenue loss in 2020 compared with the revenue in 2019.
Do not hesitate to contact us at office@vadamlaw.com or by phone at (954) 451-0792 if you have any questions regarding the RRF or any programs.