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Restaurant Revitalization Fund

April 7, 2021

The American Rescue Plan Act of 2021, that was passed in March of 2021, allocated $28.6 Billion to the Restaurant Revitalization Fund, to be administered by the Small Business Administration (SBA).

Grant Amounts

For eligible business that were in operation for all of 2019 and 2020, the maximum grant amount is $5 million for restaurants and $10 million for restaurant groups. The actual grant amount will be limited to the decrease in gross receipts attributed to the pandemic.

If an eligible business was not in operation for all of 2019, the maximum grant amount is the average monthly gross receipts in 2020 minus the average monthly gross receipts in 2019.

If an eligible entity was not in operation for all of 2020, it could potentially receive a grant that totals the amount of eligible expenses put into the business to date.

The SBA can adjust awards based on demand and “relative local costs” in the markets where the eligible business operates. 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.

Eligibility

Eligible entities includes: 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.

Businesses that are not eligible include:

  • State of local government-operated businesses.
  • An entity as of March 13, 2020 that owns or operates (together with any affiliated businesses) more than 20 locations, regardless of whether those locations do business under the same or multiple names.
  • An entity that has a pending application for or has received funds under the Shuttered Venue Operators Grant program.
  • An entity that is a publicly traded company.

Affiliated Businesses

An entity is considered to be an affiliated business if it has an equal right to profit distributions of 50% of more, or has the 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.”

Eligible Expenses

Eligible expenses include:

  • Payroll
  • Payments of principal or interest on any mortgage obligations (does not include prepayment of principal or interest on a mortgage obligation).
  • Rent payments (does not include any prepayment of rent).
  • Utilities
  • Maintenance expenses, including:
    • construction to accommodate outdoor seating, and
    • walls, floors, deck surfaces, furniture, fixtures, and equipment.
  • Supplies, including protective equipment and cleaning materials.
  • Food and beverage inventory related expenses.
  • Certain covered supplier costs.
  • Operational expenses.
  • Paid sick leave.
  • Any other expenses that the SBA determines to be essential to maintaining operations.

Funds received must be spent on eligible expenses during the covered period (February 15, 2020 through December 31, 2021) and any amounts not used for eligible expenses by the end of the covered period will need to be paid back. If a business permanently closes before the end of the covered period, the business must return the unused funds.

Application Process

The SBA is not currently accepting applications, but it is expected they will open this up within the next month.

It was initially expected that entities would need to obtain a DUNS number and register with the System of Award Management (SAM) . However, on March 30, 2021 the SBA stated that they would be waiving this process.

It is still possible entities will be required to create a login.gov user account. This login account enables you to interact with the SBA and other federal agencies. We’re awaiting final guidance to confirm.

Eligible Entities that apply must also submit a good faith certification that:

  • Uncertainty of current economic conditions makes necessary the grant request to support ongoing operations.
  • The entity has not applied for or received a “Shuttered Venue Operators” grant.

Tax Treatment

The amount of the grant used to pay eligible expenses does not need to be paid back. These grant amounts are excluded from gross income for Federal Tax purposes and in the case of a partnership or S-Corporation are treated as tax-exempt income.

Any eligible expenses paid for with RRF Grant money received are deductible for Federal Tax purposes.

It is unknown at this time if California will conform.