In March 2021, the American Rescue Plan Act of 2021 (the “Law”) has been promulgated. The law provides $ 1.9 trillion in assistance for many people and businesses overcoming the economic impact caused by the COVID-19 pandemic. Among the intended recipients of the act are food service providers and adult beverage producers, who may be eligible for grants under the new Restaurant Revitalization Fund (the “Fund”). The Small Business Administration (“SBA”) will administer the Fund and distribute up to $ 28.6 billion in grants to qualifying restaurants and similar establishments, of which $ 5 billion is initially earmarked for qualifying businesses whose gross revenues in 2019 do not. not exceed $ 500,000.
Which companies are eligible?
As you can guess from the name of the Fund, restaurants are of course eligible. In addition to conventional restaurants, food stands, food trucks and carts, caterers, bars and saloons, taverns, inns, lounges, brasseries, tasting rooms, taprooms, are eligible for a grant. , licensed facilities or premises of an alcoholic beverage producer where the public can taste, taste or purchase products, or other similar places of business where the public or customers meet for the primary purpose of to have food or drink served, including those located at an airport terminal or at tribal-owned businesses. Therefore, the Fund can prove essential for many businesses, including craft breweries, distilleries and struggling wineries. While many companies are eligible for a grant from the Fund, companies with more than twenty sites, public companies and government-run suppliers are not eligible. In addition, some live theater operators who have applied for certain grants under the Law on Economic Assistance to Small Businesses, Nonprofits, and Hard-Affected Sites are also ineligible.
How much money can a business receive from the fund and how should it be spent?
A single-site business can receive a grant of up to $ 5 million. A business with two or more locations can receive a grant of up to $ 10 million. Typically, the amount a business will receive will be equal to the business’s loss of revenue from the pandemic. To calculate the amount of the subsidy to a business, the SBA will typically compare a business’s 2019 and 2020 income.
Funds can be used in the same manner as funds received for Paycheck Protection Program (“PPP”) loans. That is, grant funds must be spent on certain labor costs, principal or interest payments on mortgage bonds, rent payments, utilities, maintenance expenses, supplies, food and beverage expenses, covered supplier costs, operational expenses, paid sick leave and any other expenses that the SBA deems essential to the maintenance of the business. It’s also important to note that funds must be used by December 31, 2021 or may need to be returned to the US Treasury.
Can PPP loan recipients receive grants from the Fund?
Yes, an otherwise eligible company can receive a grant from the Fund even if it has already received a loan under the PPP; however, the SBA will deduct any PPP loan amount from this grant. It is important to note that the Fund’s distributions are subsidies. In contrast, previous aid programs, such as PPP, generally provided ready (although loans may be forgiven) to qualifying businesses.
How can a business apply for a grant?
The SBA will administer the distribution of the Fund. Unfortunately, as of the date of this notice, the SBA application process is not yet open. Nonetheless, we expect that the application will be available on the SBA website and, once available, that applications will be submitted directly through the SBA website (as opposed to being submitted through approved banks as is the case for PPP). Similar to that of the PPP, however, applicants will need to make a good faith certification with their application that the uncertainty of current economic conditions makes the grant application necessary to support the ongoing operations of the business.
In addition, businesses owned and controlled by women and veterans and certain other socially and economically disadvantaged small businesses will be given priority during the first three weeks of the application period. Even if your business isn’t supposed to be given priority, any eligible business should be prepared to submit their application as soon as possible, as grants are otherwise awarded on a first-come, first-served basis.