The recently approved American Rescue Plan Act includes a $25 billion grant program created to help restaurants and bars affected by the pandemic. This fund, known as the Restaurant Revitalization Fund will be administered by the SBA. Here is what you need to know:
The good news is, the grant covers a broad group of businesses. The statue includes “any 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.”
Who is excluded?
State or local government-operated business, publicly traded companies, and entities that operate more than 20 locations as of March 13, 2020 are not eligible.
How much can business owners expect?
As a qualifying business, you are entitled to receive an amount equal to the loss in gross receipts in calendar year 2020 compared to calendar year 2019. The grant is reduced by any first or second-round PPP loans borrowed by the taxpayer. For example, if you own a bar that had total receipts of $1.75 million in 2019, which dropped to $750,000 in 2020, but you borrowed $150,000 in the first round of PPP loans, and another $75,000 in the second round of PPP loans, you would be eligible for a grant:
($1,750,000- $750,000 - $150,000 - $75,000) of $525,000.
It’s important to note, that the grant is capped at $10 million, and further capped at $5 million per location. This applies to chain restaurants where every location is a separate legal entity but one business controls all of the chains.
How does this work for businesses that were not open all of 2019?
- For a business that began in 2019 but was not open all 12 month, compare 2019 average monthly receipts multiplied by 12 to 2020 gross receipts, and receive a grant for the difference.
How can grant funds be used?
Funds can be used for payroll, utilities, mortgage interest, and covered supplier costs. You may also use funds for the following expenses accrued during the “covered period” – February 15, 2020 to December 31, 2021:
- Maintenance expenses, including construction to accommodate outdoor seating and walls, floors, deck surfaces, furniture, fixtures and equipment.
- Food and beverage expenses
- Supplies, including protective equipment and cleaning materials
- General operational expenses
- Paid sick leave
Other things to note:
Like the PPP, the funds are tax free, and expenses paid with the funds are deductible. However, if you don’t use all of the funds during the covered period, or if the business permanently closes before the end of the covered period, you must pay the excess back.
In order to be considered for the grant, you will have to certify “uncertainty of current economic conditions makes the loan request necessary.” You will also need to provide proof that you have not applied for a Shuttered Venue Operators grant.
Grants may be used along with the Employee Retention Tax Credit, however the grant money and the tax credit cannot be used for the same expenses. Find out if your business is taking full advantage of the employee tax credit here.
Guidance is on the way on how to apply for the $25 billion in grants. The SBA has stated that it will prioritize women and veteran owned businesses, as well as socially and economically disadvantaged businesses. We will continue to provide updates as they become available.