On March 11, 2020, President Biden signed into law the American Rescue Plan Act (ARPA), which includes a host of benefits for individuals and businesses. Included within the ARPA is the Restaurant Revitalization Fund, which will provide much-needed COVID-19 relief for the restaurant industry.
Unfortunately, not everyone who is eligible and applies for the grant will receive funds. The law only makes available $28.6 billion in funding compared to the more than $800 billion available through the PPP since the start of the pandemic. This program is extremely targeted and only certain groups of business owners will receive grants.
The bill includes $5 billion for eligible businesses with less than $500,000 in gross receipts in 2019, and the remaining $20 billion will be distributed by the SBA in an “equitable manner to eligible entities of different sizes based on annual gross receipts.”
During the initial 21-day period in which the SBA is awarding grants it must prioritize awarding grants to small businesses owned or controlled by women, veterans, or socially and economically disadvantaged businesses.
Finally, if after 60 days the funds have not been exhausted the SBA will have discretion to administer grants to eligible businesses without regard to annual gross receipts.
Who is Eligible?
Essentially, any place of business where patrons assemble for the primary purpose of being served food or drink, including establishments located in an airport terminal or that are Tribally-owned. (See list of not-eligible businesses below)
Who is Not Eligible?
- State or local government-operated businesses
- Restaurant chains that, together with affiliated businesses, own or operate more than 20 locations as of March 13, 2020
- Restaurants that have a pending application for or have received a grant for shuttered venue operators, or
- Publicly-traded companies
What is the Maximum Grant amount that a Business or Affiliated Group can Receive?
The total amount of grants an eligible entity or affiliated group can receive is $5,000,000 per location with a max of $10,000,000 in total.
Eligible expenses include:
- Payroll cost
- Payments of principal or interest on any mortgage (not including prepayments)
- Rent payments (not including pre-paid rent)
- Utilities
- Maintenance expenses, including walls, floors, deck surfaces, furniture, fixtures and equipment and construction to accommodate outdoor seating
- Supplies, including PPE
- Food and beverage expenses
- Covered supplier cost
- Operational expenses
- Paid sick leave
- Any other expense SBA says is essential to maintain operations.
How is the Amount of the Restaurant Revitalization Fund Calculated?
The amount an eligible business can receive is equal to their pandemic-related revenue loss, which is the difference between their 2020 gross receipts and their 2019 gross receipts, reduced by any amounts received from the Paycheck Protection Program (PPP) First Draw and Second Draw loans.
For example, if a restaurant’s gross receipts went from $800,000 in 2019 to $500,000 in 2020, and they have previously received $150,000 in PPP funds, then the business would be eligible for a $150,000 grant.
Applications will be administered through the U.S. Small Business Administration (SBA). The SBA is targeting early April to launch a phased rollout of the $28.6 billion Restaurant Revitalization Fund
Restaurants and Bar Owners Need to Start Preparing Now
While the launch date may not be set, restaurant owners have a few things they should be doing now to get ready for the application process.
Our experts are here to help! Contact Kelly O’Farrell at (320) 214-2959.
