Newburg Staff Writers-March 16, 2021
Within the 591 page American Rescue Plan Act of 2021 lives an important grant to further support restaurants and bars. We have included below some pertinent inquiries relative to the $28.6 billion dollar Restaurant Revitalization Fund.
Who Qualifies for the Grant ?
If your establishment involves patrons assembling for the primary purpose of enjoying food or drink you would qualify. Owners must certify that “Uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations”
The list of eligible business activities include:
Restaurants ~ Bars ~ Taprooms ~ Brewpubs ~ Taverns ~ Tasting Rooms ~ Food Trucks ~ Food Stands ~ Lounges ~ Caterers ~ Inns
What Businesses are Ineligible ?
- Publicly traded business
- Those chains with affiliated businesses that own or operate more than 20 locations (as of March 13, 2020)
- State or local government operated establishments
- Those restaurants having a pending application for or those that have received a grant under the Shuttered Venue Operators Grant
Who Administers the Grant and When Can I Apply ?
The SBA will be administering the entire program so unlike the PPP, this program will go directly through the SBA. As of the date of this article, the application is currently in process.
How is the Grant Calculated ?
The calculation is based on revenue loss between 2020 gross receipts and 2019 gross receipts, further reduced by any amounts received from the Paycheck Protection Program (PPP) First Draw and Second Draw loans.
Is There a Cap on the Grant Amount ?
Eligible entities can receive up to $5 million per location with a maximum cap of $10 million in total.
How Can My Business Spend These Funds ?
Qualified expenditures are those incurred from February 15, 2020 through December 31, 2021. Yes even though 2020 has passed, owners may retroactively apply eligible expenses with these grant funds. If funds are not fully spent or the establishment closes permanently before the end of the covered period, the establishment must return those funds not utilized to the Treasury.
Qualified expenditures include :
- Payroll costs
- Paid sick leave
- Operational expenses
- Rent and utility payments
- Mortgage payments (excluding prepayments)
- Supplies, including PPE
- Supplier costs
- COGS- food costs, beverage costs
- Maintenance and build-out expenses to accommodate outdoor seating
- Other expenses the SBA determines ‘essential’ to maintaining your operations
Are There Priorities to Receiving the Grant ?
For the initial 21 day period those businesses controlled by women, veterans, or socially/economically disadvantaged small business concerns will receive priority in receiving the grant awards.
New Ventures- What if My Business Started in 2019, 2020, or 2021 ?
Those businesses that commenced operations in 2019 are entitled to annualize their average monthly gross receipts for 2019 and contrast that to its annualized monthly gross receipts for 2020.
For example, if your 2019 average monthly receipts for May through December of 2019 are $50,000 and during 2020 your total gross receipts were $480,000 you would be eligible for $120,000 in grant funds, less any PPP funds received. ($50,000 x 12 = $600,000 (2019 annualized) LESS $480,000 (2020) = $120,000)
Those businesses that commenced operations in 2020 will need to calculate the differences between those qualified grant expenses and their gross receipts for 2020.
For example, if the establishment started in October 2020, and had qualified expenditures of $100,000 and gross receipts of $70,000, they would be eligible for a $30,000 grant less any PPP funds received.
Also those businesses not yet in operation as of the application date, but have incurred eligible expenses are eligible to have the grant proceeds match these expenditures.
How Does the Employee Retention Tax Credit (ERTC) Interplay With the Grant ?
Of your qualified payroll cost expenditures, you cannot include qualified wages used to obtain the Employee Retention Credit (ERTC). Note that business owners can certainly still claim the ERTC for 2020 and 2021 but wages used in calculating the ERTC cannot be paid with the grant proceeds.
What is the Current Tax Treatment of the Grant Proceeds ?
Grants are non-taxable. Section 9673 of the Act states that grant amounts “shall not be included in the gross income of the person that receives such amounts”.
RRF Grant Applications Will Not Require a DUNS Number
On March 30, 2021 the U.S. Small Business Administration (SBA) confirmed that applicants for the Restaurant Revitalization Grant (RRF) program will not need to register for a DUNS number (the unique nine-digit identifier for businesses) or on SAM.gov.
This is a change from early March, when it was expected that applications would require these processes as they currently do under the Shuttered Venues Operators (SVO) grant program. The shift by SBA recognizes the significant demand for the RRF program—up to hundreds of thousands of applicants are expected—and acknowledges the National Restaurant Association and our state and local partners who asked SBA to streamline and simplify the application process to avoid administrative complexity.
We will certainly keep you apprised as more information comes out relative to the SBA application and process details.