​Update: Restaurant Revitalization Fund Aims to Help Restaurants and Bars Recoup 2020 Losses

There’s some good news on the horizon for restaurants, bars, and other food- and beverage-related businesses.

The Restaurant Revitalization Fund — part of the recently passed American Rescue Plan Act — has $28.6 billion to help food and beverage businesses recover pandemic-related losses.

The Small Business Administration will administer the grants, and the application process is now open.

What Types of Businesses Are and Aren’t Eligible?

According to the American Rescue Plan Act, the following types of establishments are eligible:

• 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”

Types of businesses that aren’t eligible include:

• Any restaurant or bar that is part of a publicly traded company
• Any restaurant or bar that a state or local government owns
• A business where the owners operate more than 20 restaurants (if you’re a franchise owner but don’t control more than 20 locations, you’re probably still eligible.)

What Are the Application Requirements?

Those who apply for the fund will have to verify that the money is necessary to support their ongoing business operations. So, food and drink beverages that are still profitable and have enough capital probably won’t satisfy that requirement. Also, unlike the Paycheck Protection Program, there’s no safe harbor for grants under $2 million.

Also, qualifying businesses will have to show they suffered losses related to the pandemic. The good news is you’ll only have to show less gross receipts in 2020 than you did in 2019. But you’ll need to keep in mind that PPP proceeds are considered revenue. Also, you can’t have applied or received a grant under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act.

If your business wasn’t in operation for all of 2019 or had just opened in 2020, there’s a formula we can help you use to determine if your business suffered a loss.

What Kind of Expenses Are Eligible?

According to the act, eligible expenses include:

• Payroll
• Payments of principal or interest on any mortgage
• Rent payments
• Utilities
• Maintenance, including new outdoor seating construction
• Supplies, including PPE and cleaning materials
• Food and beverage inventory
• Covered supplier costs
• Operational expenses
• Paid sick leave
• Any other expense the SBA says is essential to maintain operations

The covered period for eligible expenses runs from Feb. 13, 2020, to Dec. 31, 2021.

How Much Will My Business Receive?

Your business should be able to receive an amount that’s equal to the loss you suffered because of the pandemic. That amount can’t exceed $10 million for each eligible business or $5 million for each business location.

As mentioned above, you’ll subtract your 2020 gross receipts from your 2019 gross receipts. You’ll also have to reduce that amount by any PPP proceeds you received in 2020 or 2021. However, Economic Injury Disaster Loans or funds you got through the Employee Retention Tax Credit program won’t count toward reducing your business’s revenues.

If you’ve never applied for a federal grant, you’ll need what’s called a DUNS number. You can register here to get your ID number.

Also, if your business is woman- or veteran-owned or is socially and economically disadvantaged, the SBA will prioritize your application.

Reach Out

If you have any questions about financial help for your food, beverage, or other business, please let us know.

This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.