The American Rescue Plan Act (ARPA) was signed into law on March 11. It delivers direct relief to restaurants through a $28.6 billion Restaurant Revitalization Fund (RRF). The RRF provides tax-free grants via the Small Business Administration (SBA).
WHO MAY APPLY?
RRF grants are for businesses where "the public or patrons assemble for the primary purpose of being served food or drink" including, but not limited to:
- Food stands and food trucks;
- Saloons, inns, taverns, bars, lounges, brewpubs, tasting rooms and taprooms; and
- Licensed facilities or premises of "beverage alcohol producers" where the public may taste, sample or purchase products.
Presumably, entertainment venues that serve food or drink, but not as their primary purpose, are ineligible. Examples include concert halls, nightclubs, movie theaters and sports venues. These venues may still seek relief under the Shuttered Venue Operators Grant (SVOG) program also administered by the SBA.
Related Read: Grants for Shuttered Venue Operators
Certain businesses are excluded from seeking grants, including:
- Entities that, as of March 13, 2020, own or operate (together with any affiliated businesses) more than 20 locations, regardless of whether they do business under the same name or multiple names;
- Publicly traded companies; and
- Entities that have applied for or received a SVOG.
Generally, a business is "affiliated" with an entity if, as of March 13, 2020, the entity has a 50% or more equity or profits interest in the business or has contractual authority to control it.
HOW MUCH MONEY IS AVAILABLE?
An entity may receive a grant amount equal to:
- 2019 gross receipts;
- Less its 2020 gross receipts; and
- Less any Paycheck Protection Program (PPP) loans received in 2020 or 2021.
However, grants are limited to $5 million per physical location and $10 million per affiliated group.
Businesses that opened in 2019 may annualize their 2019 gross receipts. Businesses that opened between January 1, 2020 and March 10, 2021, may receive grants equal to their eligible payroll costs (as defined by the CARES Act) less any gross receipts and PPP loans. Businesses that have not yet opened at the time they apply for a grant may receive funding equal to any eligible payroll costs incurred as of March 11, 2021 (less any PPP loans). Note that for businesses that opened in 2020 and 2021, the SBA has the authority to establish alternative formulas.
HOW MAY THE FUNDS BE USED?
RRF grants may be used for expenses incurred between February 15, 2020 and December 31, 2021, for a wide variety of items including:
- Payroll costs;
- Mortgage principal and interest payments (other than prepayments);
- Rent (other than prepayments);
- Maintenance expenses, including 1) construction to accommodate outdoor seating; and 2) walls, floors, deck surfaces, furniture, fixtures and equipment;
- Supplies, including protective equipment and cleaning materials;
- Food and beverage expenses that are within the entity's normal scope of business before February 15, 2020;
- Covered supplier costs (as defined by SBA guidelines);
- Operational expenses;
- Paid sick leave; and
- Other essential expenses, as later determined by the SBA.
Excess funds must be returned if a business:
- Overestimated pandemic-related losses in their grant applications;
- Fails to use all of the funds by December 31, 2021; or
- Goes out of business before December 31, 2021.
There is a limited amount of money earmarked for the RRF, so eligible establishments should submit their applications as early as possible. Until May 10, 2021, $5 billion of the Restaurant Revitalization Fund is reserved for eligible entities with 2019 gross receipts of $500,000 or less. Until April 1, 2021, the SBA will give priority to qualifying small businesses that are owned and controlled by women or veterans, or that are socially and economically disadvantaged.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.