American Rescue Plan Act of 2021:

Restaurant Revitalization Fund (RRF)

By: Alex M. Neurohr, Esq. (last updated 4/15/2021)

Who is eligible for a grant?

Where can I apply?

When can I apply?

How much will I receive?

How can I use the grant?

When do I have to use the grant?

How will the grants be taxed?

 

WHO IS ELIGIBLE FOR A GRANT?

 

Businesses where customers primarily assemble for the service of food or drink (onsite sales of at least 33% of gross receipts), including:

  • Restaurants

  • Food Trucks, Carts, Stands

  • Caterers

  • Bars, Lounges, Saloons, Taverns

  • Inns

  • Breweries, Brewpubs, Microbreweries, Taprooms, Tasting Rooms

  • Bakeries

  • Wineries

  • Distilleries

  • Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products

 

The business does not have to pre-date the COVID-19 pandemic but must have incurred eligible expenses (expenses incurred to open the business) by March 11, 2021 (the date the Act was signed into law).  

 

To target local small businesses, which have been particularly hard hit by the COVID-19 pandemic, the Program will disqualify owners that operate more than 20 locations, businesses that are part of a publicly traded company, and businesses owned by a state or local government.

 

Businesses will also be disqualified if they have:

  • Permanently closed

  • Filed for bankruptcy relief under Chapter 7 or started liquidating under Chapter 11

  • Filed for bankruptcy relief under Chapter 11, 12, or 13 and do not yet have an approved plan for reorganization

  • Received or have a pending application for a Shuttered Venue Operator Grant (SVOG).

 

WHERE CAN I APPLY?

 

The grants will be administered and dispersed by the U.S. Small Business Administration (SBA). Though not yet live, applications will be available at restaurants.sba.gov.

 

Applicants will likely encounter a platform very similar to the one used for a COVID-19 Economic Injury Disaster Loan. Though drawing this comparison, it is important to note that this Program will award grants, not loans.

 

Applications will also be accepted telephonically.

 

On April 14th, the SBA released a draft application. We encourage all eligible owners to review and prepare responses to this application in anticipation of a similar final draft from the SBA.

 

As we continue to monitor the application process, we also encourage you to watch the SBA’s COVID-19 Relief Options for updates.

 

WHEN CAN I APPLY?

 

It is still unclear when the SBA will start taking applications or, for that matter, how long eligible recipients will have to wait to receive funds; however, the application process will likely start toward the end of April and into the first weeks of May.

 

Woman-owned, veteran-owned, and socially and economically disadvantaged small businesses will be given priority if their application is received within the first 21 days of the Program. At the same time, however, it has been reported that distributions will follow just two weeks after submission. It is unclear how these particular owners will be given priority if distributions are made inside this 21-day period. Regardless of priority, however, these funds will go very fast. All eligible owners should apply as soon as practicable.

 

We will continue to monitor the SBA’s COVID-19 Relief Options for updates.

 

HOW MUCH WILL I RECEIVE?

Grants will be calculated by subtracting an applicant’s 2020 gross receipts from their 2019 gross receipts. As of right now, the value of any PPP (Paycheck Protection Program) loan previously received will be deducted from the value of the grant.

 

For businesses started after January 1, 2020 and before March 10, 2021, grants will be calculated by subtracting the applicant’s gross receipts from its expenses to open and operate during this same period. As of right now, this figure will also be decreased by the value of any PPP loan previously received.

 

For any eligible business opened after March 11, 2021, grants will be calculated by subtracting the value of any PPP loan received from all expenses incurred through March 11, 2021 to open the business.

 

Grants are capped at $10 million per owner and $5 million per physical location.

 

As of right now, there is no minimum grant amount for eligible recipients.

 

HOW CAN I USE THE GRANT?

 

Eligible expenses include any of the following incurred between February 15, 2020 and December 31, 2021:

 

  • Payroll

  • Mortgage principal or interest

  • Rent

  • Utilities

  • Operational expenses

  • Food and beverage inventory (within scope of normal business practice)

  • Paid sick leave

  • Maintenance (construction for outdoor seating, walls, floors, deck surfaces, furniture, fixtures and equipment)

  • Supplies (PPE and cleaning materials)

  • Certain covered supplier costs

  • Other expenses deemed essential by the SBA

 

As of right now, it is unclear whether alcohol-related expenses are covered. Our office will continue to monitor the information surrounding this critical question.

 

Our office encourages all readers to keep detailed records of their expenses; however, grant recipients in particular should make organization a priority.

 

WHEN DO I HAVE TO USE THE GRANT?

 

As of right now, any funds not used by December 31, 2021, must be returned; however, the SBA has the authority to extend this deadline up to 2 years after the start of the Program.

 

HOW WILL THE GRANTS BE TAXED?

 

The grants will not be subject to income taxes. Federal tax expenses paid with grant funds will be deductible.

Please contact us if you have any questions regarding the American Rescue Plan Act of 2021 or the Restaurant Revitalization Fund (RRF).

The information and materials offered on this site are for general informational purposes only, do not constitute and should not be considered to be legal advice, and are presented without any representation or warranty whatsoever, including as to the accuracy or completeness of the information. No one should, or is entitled to, rely in any manner on any of the information at this site. Parties seeking advice should consult with legal counsel familiar with their particular circumstances.