The new American Rescue Plan Act includes a relief fund, which sets aside approximately $28.6 billion for a Small Business Administration (SBA) grant program, that is designed to support the restaurant industry impacted by the pandemic shutdowns. The following information has been provided by the Economic Development Collaborative (EDC) regarding the program.
THE RESTAURANT REVITALIZATION FUND
The restaurant industry, more than any other industry in the nation, has suffered the most significant sales and job losses since the COVID-19 outbreak began. The new American Rescue Plan Act established a $28.6 billion “Restaurant Revitalization Fund” (RRF) within the U.S. Small Business Administration (SBA).
- An eligible business may receive a tax-free federal grant equal to the amount of its pandemic-related revenue loss, calculated by subtracting its 2020 gross receipts from its 2019 gross receipts.
- If the business is not in operation for the entirety of 2019, the total is the difference between 12 times the average monthly gross receipts for 2019 and the average monthly gross receipts in 2020 (or a formula from SBA).
- If the business is not in operation until 2020, it can receive a grant equal to the amount of “eligible expenses” subtracted by its gross receipts received (or a formula from SBA).
- If the business is not yet in operation as of the application date, but it has made “eligible expenses,” the grant would be made equal to those expenses (or a formula from SBA).
- Please note:
- Pandemic-related revenue losses for business are reduced by any amounts received from Paycheck Protection Program (PPP) First Draw and Second Draw loans in 2020 and/or 2021.
- Grants are not taxed like income and all normal federal tax deductions are protected.
Covered Period & Eligible Expenses:
- Eligible expenses are those incurred from February 15, 2020 to December 31, 2021, or a date determined by the SBA. If all grant funds are not spent by the business, or the business permanently closes before the end of the covered period, the business must return unused funds to the Treasury.
- Funds must be spent on payroll; principal or interest on mortgage obligations; rent; utilities; maintenance including construction to accommodate outdoor seating; supplies such as protective equipment and cleaning materials; normal food and beverage inventory; certain covered supplier costs; operational expenses; paid sick leave; and any other expenses that the SBA determines to be essential to maintaining operations.
- Eligible entities include a 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, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink.
- Own or operate 20 or fewer establishments (together with any affiliated business), regardless of ownership type of the locations and whether those locations do business under the same or multiple names, as of March 13, 2020. An affiliated business has an equity or right to profit distribution of 50 percent or more, or has contractual authority to control the direction of the business, provided that such affiliation “shall be determined as of any arrangements or agreements in existence as of March 13, 2020.”
- Entities must submit a good faith certification that:
- Uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations.
- The entity has not applied for nor received a “Shuttered Venue Operators” grant (generally for performing arts, live venues, theaters, etc.).
For an initial 21-day period, the SBA will prioritize awarding grants for small business concerns owned and controlled by women, veterans, or socially and economically disadvantaged small business concerns.
How to Prepare for the Restaurant Revitalization Fund
The Restaurant Revitalization Fund is NOT yet accepting applications. Please use the following steps to help you prepare for the application:
- To receive a RRF grant or access any federal government grants, your business will need to register for a free System for Award Management (SAM) number. Use the following steps to get started:
- Create a Login.gov account at https://login.gov/.
- Sign up for a Dun & Bradstreet D-U-N-S® Number if you do not already have one at https://fedgov.dnb.com/webform/index.jsp. This typically takes 1-2 days to process.
- Register with SAM at https://sam.gov/SAM/ using your Login.gov information, DUNS number and standard business information (such as your Tax ID Number). It can take up to 2 weeks to receive your SAM number.
- Do not register for a SAM number on any other website or pay for a SAM number.
- Work with an accountant to prepare relevant paperwork that clearly shows your gross revenue loss in 2020 as compared to 2019.