Relief After The Lockdown
The restaurant industry has been among the hardest-hit sectors following the economic downturn caused by COVID-19. To help revive the crippled industry and bring the jobs back, the American Rescue Plan established the $28.6 billion Restaurant Revitalization Fund (RRF) at the U.S. Small Business Administration (SBA). The SBA will administer the funds to the hardest-hit businesses.
Those among the following categories are eligible for additional government relief:
- Caterers
- Bars
- Food Trucks
- Restaurants
- Brewpubs
- Taverns
- Lounges
- Tasting Rooms
- Taprooms
The Restaurant Revitalization Fund was created to absorb losses for such businesses. RRF was made through 2021’s ARPA, the American Rescue Plan Act. Grants will be allocated requisite to pandemic losses. The cap is $10 million and includes affiliates. No more than $5 million will be allowed per location. Restaurants receiving PPP (Paycheck Protection Program) loans must have those deducted from RRF grants.
Businesses that qualified for PPP and fit the above categories are eligible for RRF grants through the SBA. Businesses can apply at sba.gov/restaurants. The online portal is not yet live but should by the end of April, 2021.
Grant Details
Grant funds can’t be used with Employee Retention Credits (ERC). However, proceeds from such grants aren’t federally taxable. Meanwhile, expenses such funds are used for are tax-deductible if authorized.
Individual state taxes will vary in accordance with local laws. Grant spending should cover costs from 2/15/2020 – 12/31/2021. What is allowed includes the following expenses:
- Utilities
- Payroll
- Principal And Interest Payments On Mortgages, Minus Principal Prepayments
- Rent, Minus Prepayments
- Maintenance – Outdoor Seating Construction Costs
- Additional Maintenance Fees: Walls, Floods, Decks, Furniture, Fixtures And Equipment
- Supplies, Sanitation (Cleaning), And Personal Protective Equipment
- Food/Beverage Costs Within Normal Operations From 02/20/21 – 12/31/21
- In Select Situations, Coverage Dates From The SBA Vary For Expense Calculation
- Certain Supplier Costs As Covered Under The Grant Program
- Other Operational Expenses
- Instances Of Sick Leave
- Other Expenses Determined Under SBA Coverage
The amount of grants are designed to counterbalance revenue losses between 2019 and 2020, minus PPP loans. For operations not functioning in 2019, calculating this figure involves determining the amount which differs between gross earnings in 2019 and 2020, then multiplying that figure by twelve. Different formulas may be distributed by the SBA as the RRF develops. For those entities who weren’t operating until 2020, eligible expenses must have gross received receipts subtracted. Again, there may be alternative formulas provided as necessary.
If “Tavern A” didn’t get “rolling” until March, 2020, spent $400k in expenses covered under the RRF, but only pulled in $220k, that tavern might secure a grant of $180k. Entities that didn’t open until the middle of March, 2020 will yet be eligible for grants balancing out incurred expenses. Entities run by local or state governments including 20+ locations, and traded publicly, are not eligible for RRF assistance. Also, businesses who’ve received a Shuttered Venue Operators Grant aren’t eligible for RRF coverage.
Supporting Documentation
Entities eligible need evidence to define gross receipts. This allows calculation of gross revenue reduction over 2020. Evidence must be compared to 2019. Projected expenses eligible for coverage between 2/15/2020 and 12/31/2021 should also be calculated and applied for. Lastly, subtract PPP and ERC funding already received from requested grant amounts. Prior the application portal going “live”, collect necessary information to expedite the application process. This gets businesses seen and approved quicker.
Apply Early
Once the online portal to apply is active, you are urged to apply as soon as possible as there are not enough funds to accommodate the entire industry. Shortages will develop. The SBA will provide grants until funds no longer exist–so get involved the first day the application portal goes live. Congress may approve additional funding, but this isn’t assured.
Now, the fund is $28.6 billion. If an entity made under $500k gross in 2019, there’s $5 billion of that $28.6 billion allocated specifically to them. Grants will be distributed based on application order. Women, socially disadvantaged operations, economically disadvantaged businesses, and veterans will get first priority among first applicants.
Please visit the SBA’s site for more guidelines and information.