The Restaurant Revitalization Fund as Part of the $1.9 Trillion American Rescue Plan

Mar 23, 2021

Harry A. Steindler, CPA – Partner

One year ago today, as we are writing this, Governor Pritzker ordered all restaurants and related food service businesses to stop “on-premises” consumption. The original order was to last two weeks. The rest is history – without a doubt, the darkest year ever for the restaurant and bar industry. As the pandemic took over the world, the Federal Government offered various programs to help our restaurants and their millions of workers survive, including funding to pay for workers directly affected by COVID, payroll tax deferral programs, Economic Injury Disaster Loans, the Paycheck Protection Program (PPP) (parts 1 and 2), and Employee Retention Tax Credits. Other state and local loan and grant programs and restaurant industry programs helped too. For some, these programs, along with experience, creativity, and luck, helped sustain their businesses, but for others, sadly, the only option was closing their doors. For those of you who have struggled, who have used ingenuity and grit, perhaps have benefited from some of these programs, there almost seems to be a light at the end of the tunnel. No doubt, there is still a long way to go. To that effect, the Federal Government has included a long-awaited fund, just for the restaurant industry, as part of the $1.9 trillion American Rescue Plan (ARP).

The ARP includes $28.6 billion specifically for restaurants, bars, and other food service entities. The Restaurant Revitalization Fund (RRF) is available to make grants of up to $10 million per business (limited to $5 million per location) to “eligible entities.”

Eligible entities include:  Restaurants, food stands and food trucks, caterers, saloons, inns, taverns, bars, lounges, brewpubs, tasting rooms, tap rooms, and “licensed facilities or premises of a beverage alcohol producer where the public or patrons assemble for the primary purpose of being served food or drink.” Note:  This includes such entities located in an airport terminal or Tribally-owned concerns.

Entities that meet the above descriptions are excluded from the RFP if they own more than 20 locations, are a public company, have a pending application for, or have received a grant under section 324 of the Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act.

Grants are based on “pandemic-related revenue loss,” determined as follows, but are reduced by the amount of PPP and PPP Second draw loans.

  • If your entity was in business for all of 2019 – The amount by which your 2019 gross receipts exceeded your 2020 gross receipts
  • If your entity opened in 2019 – The amount by which your annualized 2019 gross receipts (2019 gross receipts divided by the number of 2019 months open X 12) exceeded your 2020 gross receipts
  • If your entity opened sometime between January 1, 2020 and March 11, 2021 – The amount of payroll costs less your gross receipts
  • If your entity has not yet opened – The amount of payroll costs incurred as of March 11, 2021

Grants can be used for the following expenditures:  Payroll costs as defined in the CARES Act for PPP loans, mortgage principal and interest, rent, utilities, and maintenance expenses including construction and furnishing costs for outdoor seating and supplies, including personal protection equipment and cleaning materials. Grants can also be used for food and beverage costs within the normal scope of the business, covered supplier costs (as defined by the CARES Act for PPP), operational expenses, paid sick leave (other than those for which a payroll tax credit under FFCRA has been received), and other expenses determined by the SBA to be essential to maintaining the eligible entity.

Awards of RRF Funds will be governed as follows:  During the first 60 days following March 11, 2021, $5 billion will be available to entities with 2019 gross receipts of $500,000 or less. The remaining $23.6 billion will be awarded as determined by the Administrator of the Small Business Administration (Administrator). During the initial 21-day period in which the Administrator award grants, funds will be prioritized for small business concerns owned and controlled by women, veterans, and small business concerns defined as socially or economically disadvantaged as defined in the Small Business Act.

Other than as stipulated above, grants will be awarded based on the order in which applications are received by the Administrator. Note:  The process for applying for RRF grants has not yet been announced.

Certification – Applicants must make a good faith certification that the uncertainty of current economic conditions makes necessary the grant request to support ongoing operations of the eligible entity.

We recognize this is a highly technical article with many complex rules. We hope this will alert you to the fact that you and your business may be eligible for some significant tax savings. We encourage you to get in touch with your MichaelSilver professionals to explore the possibilities or to answer any questions about the Restaurant Revitalization Fund, the American Rescue Plan Act provisions, or any of the previous government funding plans. We can be reached at 847.982.0333.