As part of the American Rescue Plan Act signed March 11, 2021, $28.6 billion is allocated to the Restaurant Revitalization Fund program. Monies from this fund are to be paid as tax-free grants to restaurants, bars, and associated food and beverage related businesses in order to provide them with compensation for their reduced revenues of 2020.
Generally speaking, restaurants can apply for grants that are equal to 2020 gross revenue minus 2019 gross revenue. For businesses in operation for all of 2019 and 2020, the maximum grant size will be $5 million for restaurants and $10 million for restaurant groups. Grant funds will not be taxed like income.
According to Forbes.com, "In addition to qualifying as an eligible entity, a business must also show that they have suffered a pandemic-related loss. In order to do so, an entity only needs to show that they had less gross receipts in 2020 than they did in 2019, but PPP loan proceeds are considered to be revenues for purposes of this calculation.
Therefore, under this new law, if your business kept the same pricing, sold one less side order of fries in 2020 compared to 2019, and received no PPP loan, your restaurant has suffered a pandemic-related loss."
Quick takes for the Restaurant Revitalization Fund:
- Amount given to restaurant in form of grant, not a loan. Does not need to be paid back if used for operating expenses. Grant is nontaxable.
- Definition of restaurant as follows: “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 which the public or patrons assemble for the primary purpose of being served food or drink.”
- Does not qualify if:
- State or local government operated business
- As of March 13, 2020 owns or operates more than 20 locations regardless of whether the location operates under same or different names
- Has a pending application for or has received a Shuttered Venue Operators gram
- Is a publicly traded company
- Determining amount of grant for existing restaurants:
- Gross receipts of restaurant in 2019
- Less gross receipts of restaurant in 2020
- Less amount of any PPP loan from first or second draw
- Apply at SBA.gov. No guidance yet on the application process from the SBA
- Priority in awarding grants (1) Women owned (2) Veterans (3) socially economically disadvantaged small business. Grant process will be open for 21 days.
- Max grant of $10,000,000 per application and grant limited to $5,000,000 per physical location.
- Eligible entity makes good faith certification that uncertainty of current economic conditions makes necessary the grant request to support its ongoing operations.
Is your restaurant still looking for tips on opening safely? Download our complementary re-opening checklist for restaurants.