COVID-19 ALERT: Restaurant Revitalization Fund
On March 10th, the House passed a $1.9 trillion coronavirus relief package, the American Rescue Plan, and it was signed into law by President Biden on Thursday, March 11th. The relief package will appropriate $28.6 billion to establish a Restaurant Revitalization Fund (RRF), administered by the Small Business Administration (SBA).
The RRF will provide grants to eligible entities based on their “pandemic-related revenue loss.” Eligible entities include “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”, subject to other restrictions[1].
The “pandemic-related revenue loss” is determined by comparing gross revenue from 2019 to 2020, reduced by any Paycheck Protection Program loans received. The maximum grant amount is $10 million per entity and $5 million per location.
To obtain funding, eligible entities are required to make a good faith certification that “the uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations of the eligible entity.” During the first 21 days of the program, the SBA is instructed to prioritize applications from restaurants owned by women, veterans and individuals with social and economic disadvantages. Additionally, $5 billion of the funds are reserved for businesses that had gross receipts of less than $500,000 in 2019. Entities must use the funds on eligible expenses, including payroll, employee benefits and paid sick leave, mortgage, rent, utilities, outdoor seating construction, supplies, PPE, cleaning materials, operational costs, debt obligations to suppliers and food costs.
Warren Averett Insight:
Based on the language in the bill, it appears that the SBA will have the ability to reduce grant amounts based on demand for the program. We expect there to be significant demand for these grants, so eligible entities should begin compiling information to apply while they are awaiting additional guidance. Warren Averett will continue to monitor the RRF for new developments and will update this page as additional information becomes available.
[1] An eligible entity does not include “a state or local government operated business; as of March 13, 2020, owns or operates (together with any affiliated business) more than 20 locations, regardless of whether those locations do business under the same or multiple names; has a pending application for or has received a grant under section 324 of the Economic Aid to Hard Hit Small Businesses, Nonprofits, and Venues Act (title III of division N of 17 Public Law 116–260); or is a publicly-traded company.