New Restaurant Revitalization Grants Coming

The American Rescue Plan Act, enacted on March 11, 2021, contained a number of COVID-19 relief provisions addressing individuals and business concerns.  Among those provisions is the Restaurant Revitalization Grant, a new program to be administered by the SBA to provide direct relief to small businesses in the hard-hit hospitality industry.  The new Restaurant Revitalization Grant program is outlined below.

Eligibility

• Eligibility is not limited to restaurants, rather, food trucks, food carts, caterers, tasting rooms, and other businesses in which the primary purpose of serving food or drink are eligible entities
• State and local government-operated businesses are not eligible
• A business that has a pending application for, or that has received a, Shuttered Venue Operators Grant is ineligible
• A entity that, together with any affiliated businesses, owns or operates more than 20 locations as of March 13, 2020 is ineligible
• Publicly-traded companies are ineligible
  

Priority

• In the first 21-days of the program, the SBA will prioritize grants to small business concerns owned and controlled by women, owned and controlled by veterans, or socially and economically disadvantaged business concerns
• An initial set aside of $5 billion is made for businesses with gross receipts during 2019 of $500,000 or less
  

Grant Amount

• An entity is eligible for a grant equal the difference obtained when subtracting its 2020 gross receipts from its 2019 gross receipts.  If the difference is not greater than zero, or if the business was not in operation in 2019, the Act provides alternative means of calculating the grant amount.  In any event, the pandemic-related revenue loss calculation must be further reduced by any amounts received from a PPP first or second draw loan
• The maximum grant amount to an eligible entity, including its affiliated businesses, is $10,000,000 in the aggregate and $5,000,000 as to any one physical location of the entity
• If a business does not use all of the funds of permanently closes before the end of the program, it must return any remaining funds
  

Use of Funds

The grant may be used for the following purposes:

• Payroll costs
• Payment of principal and interest on a mortgage obligation (but not prepayment)
• Rent payments (but not prepayment)
• Utilities
• Maintenance, including construction to accommodate outdoor seating, and walls, floors, deck surfaces, furniture, fixtures, and equipment
• Supplies, including PPE and cleaning materials
• Food and beverage expenses within the normal scope of operations
• Covered supplier costs
• Operational expenses
• Paid sick leave
• Any other expenses as designated by the SBA
  

Tax Treatment

• Grants received are not gross income to the recipient
• No deduction or basis increase will be denied as a result of the exclusion from gross income of the grant amount
• For partnerships and S-Corps, the grant is treated as tax exempt income
  

If you have any questions regarding whether your business qualifies for a Restaurant Revitalization Grant, or if you would like assistance in preparing to apply, please contact a MacDonald Illig attorney.