Thursday 04/22/2021

The American Rescue Plan: Restaurant Revitalization Fund

On March 11, 2021, President Biden signed the American Rescue Plan Act into law. Included in the act is the Restaurant Revitalization Fund (RRF), which provides much-needed support for the recovery of the greatly impacted restaurant industry. Applications open Monday, May 3, 2021 at noon Eastern time for priority restaurants for three weeks. After this time, all eligible restaurants are encouraged to apply. According to the National Restaurant Association, foodservice sales have fallen $255 billion and 110,000 restaurants have closed over the course of the year.

About the Restaurant Revitalization Fund

The RRF creates a $28.6 billion grant program specifically targeting hard-hit restaurants and bars. Eligible businesses may receive a tax-free federal grant equal to the amount of its pandemic-related revenue loss, calculated by subtracting its 2020 gross receipts from its 2019 gross receipts. The maximum grant size will be $5 million for restaurants and $10 million for restaurant groups. Grants are not taxed like income and all normal federal tax deductions are protected.

Who is eligible?

Eligible entities include restaurants, food trucks, bars and brewpubs, among other establishments, that (1) do not own or operate more than 20 units and (2) are not publicly traded companies. For multi-brand operators, the 20-unit cap applies across brands. If you started business in 2020 or 2021, you may also be eligible even if you did not have gross receipts in 2019.

What can grant funds be used for?

Funds from the grants can be spent on a wider range of expenses than previous relief programs’ funds. Grant funds may be used to cover payroll costs, rent payments, utilities, maintenance expenses, supplies, F&B expenses within the normal scope of business practice, covered supplier costs, operational expenses, paid sick leave, outdoor seating construction, personal protective equipment (PPE), cleaning materials and other expenses the SBA deems essential.

What should you do now?

The Small Business Administration (SBA) will open applications for the Restaurant Revitalization Fund Monday, May 3, 2021 at noon Eastern time. We recommend that you reach out to your accountant to prepare relevant paperwork that clearly shows your gross revenue loss in 2020 as compared to 2019.

When the time comes to apply, you will either apply through an SBA-recognized point-of-sale restaurant partner or directly through the SBA application portal: https://restaurants.sba.gov. Participating POS providers include Square, Toast, Clover, NCR Corporation (Aloha). If you are working with Square or Toast, you do not need to register beforehand to use the portal. To download a sample application, click here.

Five billion dollars of the fund will be set aside for restaurants with gross receipts under $500,000 and, for the first three weeks of the application period, the SBA will prioritize awarding grants for women-, veteran-, or socially and economically disadvantaged-owned businesses. After this period, all eligible restaurants are encouraged to apply.

Restaurant owners should also be sure to take advantage of other federal resources such as the expansion of the Employee Retention Tax Credit; the extension of the Work Opportunity Tax Credit; and inclusion in the Economic Injury Disaster Loans program.

We’re here to help

Questions? Reach out to our Coronavirus Crisis Team at ckcrisisteam@corrigankrause.com.   

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