The American Rescue Plan Act of 2021, which was signed into law on March 11, 2021, includes relief provisions for restaurants and other similar businesses. The Small Business Administration (SBA) will administer the Restaurant Revitalization Fund grant program. The grant amount generally equals the excess of 2019 gross revenues, over 2020 gross revenues.
Subject to further guidance, once a business receives the grant proceeds, they must use the proceeds on eligible expenses, but there is no requirement to spend a certain minimum percentage of the grant proceeds on a specific type of eligible expense (payroll, for example). The SBA is expected to make applications available in the coming weeks. The provisions include the following:
- Restaurants, bars, food stands, food trucks, and a number of other establishments are eligible.
- However, the following are not eligible:
- State or local government-owned establishments
- Publicly traded companies
- Businesses with more than 20 locations (including affiliates) as of March 13, 2020; and
- Businesses that have received (or with pending applications for) grants under section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act
- “Pandemic-Related Revenue Loss” equals 2019 gross receipts, minus 2020 gross receipts.
- Eligible restaurants generally may receive this amount as a grant (minus any PPP or EIDL loan amounts received).
- Businesses should apply as soon as possible once applications are available.
- $28.6 billion has been allocated to this grant program, $5 billion for businesses with gross revenues of $500,000 or less and $23.6 billion for businesses with gross revenues greater than $500,000
- Grants are capped at $10 million per entity and $5 million per location.
- Priority during the initial 21-day award period for eligible entities that are (according to certification by the business):
- small business concerns owned and controlled by women
- small business concerns owned and controlled by veterans, and
- socially and economically disadvantaged small business concerns
- The “covered period” is the period between February 15, 2020 and December 31, 2021
- Eligible costs for grant proceeds include payroll costs, rent (including leases but not prepaid rent), utilities, maintenance (including construction for outdoor seating and related re-design), supplies (including protective equipment), food and beverage expenses, and operational expenses
- Other highlights:
- This is a grant program, so no loan application or forgiveness request is required
- Certification is still required:
- the uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations of the eligible entity; and
- the eligible entity has not applied for or received a grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (generally for live venue operators and certain related businesses)
- Currently, there are no required allocations to specific types of eligible expenses
- SBA guidance will be important for more detailed substantive guidance, procedural guidance, and forms, etc.
Rosenberg Martin Greenberg, LLP is a full-service business law firm experienced in all aspects of business planning and transactions. For more information on the American Rescue Plan Act of 2021, please contact Lorenzo Bivans at 410.727.6600 or lbivans@rosenbergmartin.com.