Restaurant Revitalization Fund Grant Program

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Winthrop & Weinstine, P.A.

Congress has authorized a promising grant program for restaurants, bars, breweries, food trucks and caterers, with grants awarded based on the recipient’s decline in revenues during 2020. The Restaurant Revitalization Fund Grant program is part of the American Rescue Plan Act of 2021, which was signed into law on March 11, 2021. Continue reading for a summary of the grants authorized by this legislation as of the time of its signing; we expect that there may be modifications to the program terms, as regulations or guidance are forthcoming.

Restaurant Revitalization Grants

What is it? A $28.6 billion program providing cash grants to restaurants (including bars, breweries, caterers and food trucks) that experienced reduced revenue in 2020.

How much can I receive? Cash grants will equal the amount by which the recipient’s gross receipts decreased in 2020 as compared to 2019, minus the amount of any PPP loans received by the restaurant. The grant is capped at $10 million for each recipient, or $5 million per restaurant location.

Who qualifies? An “eligible entity” is any business in which the public assembles to be served food and drink, including restaurants, food trucks, food carts, caterers, bars, and brewpubs. Gross receipts from 2020 must be lower than those in 2019 for a grant to be generated. Restaurants are ineligible if they (i) had more than 20 restaurant locations (aggregated with affiliates) as of March 10, 2020, or (ii) are publicly traded. Grant recipients will need 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 (you may recognize this certification requirement from PPP applications).

How can I get the funds? The Treasury Department will be allocating funds to the Small Business Administration (SBA) to administer the program. While details are not yet fully available, this program appears to be direct-to-recipient, similar to the EIDL Advance program (with applications accepted through an online portal from SBA’s site), rather than a bank-administered program like the PPP.

How can I spend the funds? The grant can be spent on essentially all operating expenses that have been incurred as a result of, or during, the COVID-19 pandemic. Specific categories include payroll costs (definition borrowed from PPP), rent or mortgage payments, utilities, maintenance, supplies, food and beverage costs, certain supplier costs and other operational costs. Grant funds must be spent by December 31, 2021 or returned.

How will this be taxed? Not only is the grant excluded from gross income, but the business will be able to deduct expenses paid with grant funds from their gross income.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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