Washington, D.C. (April 12, 2021) - Restaurants and bars, among the businesses hit hardest by the COVID-19 pandemic, will soon be able to apply for a new tax-free grant program enacted as part of the recently enacted American Rescue Plan Act of 2021, signed into law on March 11, 2021. The Restaurant Revitalization Fund (RRF) will provide $28.6 billion in grants for eligible restaurants and bars that can certify they need the funds to support ongoing operations of the business.
The SBA has yet to issue specific guidance and establish an application process, but the key points are as follows:
- Restaurants, bars, and a variety of other food-serving establishments are eligible for grants, as long as they are not publicly traded companies, businesses with more than 20 locations (including affiliates), state or local government-owned operations, or entities that received grants under the Shuttered Venue Operator Grant program (Section 324 of the Hard-Hit Small Businesses, Nonprofits, and Venues Act, passed in late 2020). Businesses that received assistance under the Paycheck Protection Program (PPP) or Economic Injury Disaster Loan (EIDL) programs are not disqualified.
- The RRF is a grant program and does not involve a loan application or approval by a lender.
- The grant amount is based on the excess of 2019 gross revenues over those in 2020 (counting any amounts received under first or second draw PPP loans as revenues). Businesses that were not in operation for all of 2020 may qualify to receive a grant for the amount of eligible expenses incurred up to the date of the grant application. During the initial 21 days of the application period, priority will be given to small businesses that are owned and controlled by women, veterans, and socially and economically disadvantaged individuals.
- Grants are capped at $10 million per entity, and $5 million per location. Of the total grant funding, $5 billion has been designated for businesses with annual gross revenues less than $500,000, and $23.6 billion for those with gross revenues greater than $500,000 per year.
- RRF grants can be used for a significantly larger number of uses than has been the case with the PPP programs: payroll costs, rent (including leases but not prepaid rent) or mortgage principal or interest, utilities, maintenance (including construction for outdoor seating, furniture, fixtures, and equipment), supplies (including personal protective equipment and cleaning materials), food and beverage costs, and operational expenses.
- The "covered period" for using the funds is February 15, 2020 to December 31, 2021, unless the SBA extends this time frame.
The RRF is a much smaller program than the PPP loan and forgiveness program, and nothing prevents a business from applying for both types of relief. This is especially important, since the RRF may quickly run out of funds, particularly given the priorities established for certain groups in the first 21 days of the application process.
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