- American Rescue Plan establishes $28.6 billion for a grant program to support restaurants, bars, and others in the food service and hospitality industry
- Initial rules set guidelines for who is eligible and what the funds can be used for
- Businesses can set up the necessary registration and arrange documentation while awaiting SBA rules on the program
Summary by Dirk Langeveld
The COVID-19 pandemic put immense pressure on restaurants and bars, severely limiting revenues and forcing tens of thousands of establishments across the United States to temporarily or permanently close. The onset of warmer weather and the distribution of COVID-19 vaccines offer hope that customers will return in greater numbers, and these businesses are also set to receive further support through the Restaurant Revitalization Fund.
Established as part of the $1.9 trillion American Rescue Plan, the Restaurant Revitalization Fund allocates $28.6 billion in grants for restaurants, bars, and other businesses in the food service industry. Of this amount, $5 billion will be set aside for businesses that earned less than $500,000 in revenues in 2019.
While the U.S. Small Business Administration has not yet opened the grant program to applications, the National Restaurant Association anticipates that this could happen as early as April. In the meantime, eligible businesses can familiarize themselves with the program and start preparations to submit an application.
Who is eligible?
The Restaurant Revitalization Fund is open to a broad range of food and beverage businesses, including restaurants, bars, catering companies, breweries, food trucks, food stands, and more. A 21-day exclusive period at the start of the grant program will accept applications only from women-, veteran- and minority-owned establishments as well as socially or economically disadvantaged businesses.
Affiliated groups with more than 20 locations are not eligible for a grant. The program also excludes publicly traded companies, businesses that have applied for or received funds through the Shuttered Venue Operators Grant program, and businesses owned or operated by state or local governments.
How much can I receive?
Grants are capped at $10 million, or $5 million per location. For longstanding businesses, the amount is calculated by deducting 2020 gross revenues (including any funds received through the Paycheck Protection Program) from 2019 gross revenues.
For businesses that opened in 2019, revenue for that year is determined by multiplying the revenues by 12 and dividing them by the number of months in business in 2019 before subtracting 2020 revenues and PPP funds. Businesses that opened in 2020 are eligible for grants, but only for eligible expenses incurred.
Grants are not counted as taxable income by the Internal Revenue Service.
What can funds be used for?
Grants can be spent on expenses incurred between Feb. 15, 2020 and Dec. 31, 2020. The SBA Administrator can also extend the period of eligible expenses up to two years.
Funds can be spent on a wide range of expenses, including payroll, mortgage or rent payments, utilities, supplier costs, paid sick leave, personal protective equipment, and expenses incurred in establishing outdoor dining areas.
What information are we waiting for from the SBA?
The SBA still needs to finalize the Restaurant Revitalization Fund’s rules and regulations before opening the program. For example, it might revise the formula used to calculate grants. In addition, the SBA will provide further information on how businesses will report how the funds are used.
The SBA maintains a portal on COVID-19 relief options, and further information on the Restaurant Revitalization Fund should be posted here.
How can eligible businesses prepare?
Businesses can register for the Data Universal Numbering System, which is required to receive federal grants, as well as the System for Award Management. The Independent Restaurant Coalition has guidance on how to navigate these systems.
Businesses should also start to organize documentation that will be required for the application, especially financial information for 2019 and 2020. The SBA will likely establish a preliminary document checklist similar to that established for the SVOG program.
The Independent Restaurant Coalition recommends that businesses “exhaust all federal programs that are available to restaurants while you are eligible,” including applying for a PPP loan, rather than waiting for a grant through the Restaurant Revival Fund or the RESTAURANTS Act. The organization has backed the latter legislation, which would provide $120 billion in grants to restaurants and bars, but the bill has not yet come to a vote in Congress.
