When Congress passed the $1.9 trillion American Rescue Plan, it included a $28.6 billion relief package earmarked for grants to restaurants called the Restaurant Revitalization Fund (Fund).
The Restaurant Revitalization Fund supplies tax-free federal grants to eligible restaurant businesses equal to their COVID-19 pandemic-related revenue losses. Fund grants do not need to be paid back. Unlike the Paycheck Protection Program (PPP), which was administered by lenders with the Small Business Administration (SBA) in the background, Fund will be administered directly by SBA.
Who is Eligible?
The Fund provides grants to “eligible entities,” which include restaurants, food stands, food trucks, food carts, caterers, saloons, inns, taverns, bars, lounges, brewpubs, tasting rooms, taprooms, and similar businesses where patrons assemble for the primary purpose of being served food or drink.
Businesses that have applied for or received a Shutter Venue Operators grant are not eligible. Publicly-traded companies are ineligible, but franchisees of publicly-traded companies are eligible.
How Much is Available?
Grants will be available in amounts of up to $5 million per physical location, with a maximum of $10 million for eligible entities. $5 billion of the Fund is earmarked specifically for smaller operators, specifically, eligible entities with 2019 gross receipts of $500,000 or less. The remaining $23.6 billion of the Fund is available for all other eligible entities.
Grant amounts will be based on “pandemic-related revenue loss,” which generally equals the difference between 2020 gross receipts and 2019 gross receipts. If your business was not operating for the entirety of 2019, revenue loss would be determined by annualizing gross receipts—i.e., comparing 12 times average 2019 monthly gross receipts versus 12 times average 2020 monthly gross receipts. If your business began in 2020, you may still be able to receive a grant equal to the amount of “eligible expenses,” less 2020 gross receipts. Finally, for a business not yet in operation as of the application date, grants equal “eligible expenses.”
Pandemic-related revenue losses are reduced by any PPP loans received. Funding received from the Economic Injury Disaster Loans (EIDL) or the Employee Retention Tax Credit (ERC) do not count towards 2020 revenues. However, EIDL and ERC funds may not be used to cover the same expenses as Fund grants.
What Expenses are Eligible?
There is a wide range of expenses for which the grant funds may be used. Eligible expenses include pay roll costs, mortgage obligations, rent payments, utilities, maintenance expenses, supplies, food and beverage expenses, supplier costs, paid sick leave, or any other expense the SBA determines to be essential for the eligible entity. Renovation and redecoration are not eligible expenses.
Eligible expenses are those expenses incurred beginning February 15, 2020 and running through December 31, 2021.
When will grants become available?
There is not a concrete date when the SBA will begin accepting Fund applications. You can follow the SBA’s COVID-19 relief efforts at http://www.sba.gov/coronavirusrelief or learn more about the American Rescue Plan Act here: American Rescue Plan Act Elevates Small Business Support in Response to COVID-19 Pandemic (sba.gov)
What Should You Do Now?
Most commentators expect high demand for Fund grants, so you should begin preparing as soon as possible. While waiting for the Fund applications to open, you should obtain a Data Universal Numbering System (DUNS) number and a System for Award Management (SAM) number, both of which will be required to complete any application and currently are taking roughly 2 weeks to obtain. Another step you should take is to compile receipts and financial statements to demonstrate 2019 and 2020 revenue and expenses.
Please contact Chris Hahn, Spring Valley EDA Director with any question at 612-327-9729 or email director@SpringValleyEDA.org