Financial Management and Disaster Relief
Restaurant Revitalization Fund: $28.6 Billion in Cash Grants to Restaurants
- Funding is in the form of grants which do not have to be paid back.
- Grant amounts are based on sales declines in 2020 (as compared to 2019), with maximum grants of $5 million per location and $10 million across an affiliated restaurant group.
- Grants can be spent on: payroll costs; payment of principal and interest on any mortgage obligation; rents; utilities; maintenance expenses; PPE supplies; previously-defined covered supplier costs; food and beverages; paid sick leave; and operational costs.
- $5 billion is ear-marked for restaurants with less than $500,000 in 2020 sales, with the first 21 days of the program prioritizing women-, minority-, and veteran-owned businesses. The remaining $23.6 billion is distributed to qualifying restaurants on a first-come, first-served basis.
Do you need assistance to apply for these grants?
The latest round of COVID-19 relief includes support for the hospitality industry in the form of grant money, as opposed to loans that would have to be paid back. As we start to look ahead to a post-COVID world, this assistance could be the difference between your restaurant — or affiliated group of restaurants — surviving or thriving.
Restaurant Revitalization Fund eligibility
The Restaurant Revitalization Fund provides real economic relief for the restaurant sector based on declines in top-line sales experienced during 2020 (as compared to 2019). The new law targets smaller restaurant groups of 20 or fewer units, providing up to a $5 million grant per unit, and up to a total of $10 million per restaurant affiliated group.
An eligible entity is any of the following: 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; or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink.
These guidelines make it clear that this program provides relief not only for traditional restaurants, but also for bars, wineries, and breweries.
An updated covered period supports newer businesses
The covered period for this program is February 15, 2020 – December 31, 2021 (or a date to be determined by the Small Business Administration (SBA) that is no later than two years after the program is enacted). The grant size is initially determined based on the “pandemic-related revenue loss,” defined as the difference between 2020 and 2019 gross receipts. From this amount, you then deduct all amounts received under he Paycheck Protection Program (PPP) in either 2020 or 2021.
If your business was not in existence for all of 2019, annualize your average monthly sales for all of 2019 and compare it to your average monthly sales for all of 2020. If the entity opened between January 1, 2020, and March 10, 2021, calculate the expenses incurred since opening — minus any gross receipts received — to determine the eligible amount. Any restaurants that have not yet opened but have incurred expenses prior to opening qualify for funding as well. More guidance will be coming soon as well as the application forms.
When you submit the request, you must attest that the grant is necessary to support ongoing operations, given the uncertainty of current economic conditions. And, you must confirm that you have not also applied for or received a grant under the Shuttered Venues program.
Additional eligible categories introduced to cover expenses
This program provides the most flexibility seen so far with regard to covered expenses. This grant can not only be used for similar categories of expenses covered by the PPP programs — e.g., payroll costs, rent, utilities, personal protective equipment, capital improvements to comply with COVID-19 requirements, operations costs, supplier costs — but now also for payments for mortgage principal and interest payment, food and beverages, and paid sick leave.
These grants cover these expenses for restaurants through the end of 2021, as well as reimbursement for costs incurred back to February 15, 2020 (if they have not been covered by a previous program like the PPP). If grant money is not spent for allowable costs by the end of the covered period, it is to be repaid by the end of the covered period.
Prepare now for the application process
Since this program doesn’t require loan forgiveness, it will likely be quite popular with restaurants across the United States. As this program is administered through the SBA directly, the application process is accessed via an online portal on the SBA website that should be available in a matter of weeks. While preference is being given to certain minority-owned businesses for 21 days, we encourage all restaurants who qualify to be ready to apply as soon as the SBA provides the application form and online portal to do so.
Expect these funds to go quite fast since they target some businesses that were not able to obtain funding in earlier programs, such as businesses which opened during the pandemic as well as businesses that suffered gross receipts losses lower than the 25% level required for the PPP second draw program.
How we can help
There are still many questions to be answered about the application forms and guidance that we expect to be available in the coming weeks from the SBA. CLA’s team of professionals will continue to stay informed of the latest COVID-19 relief programs. We’re here to help you navigate the interplay of all of the relief programs and help you find potential opportunities to benefit your restaurant organization. Contact us if you’re in need of assistance.
- Karen Blacik
- BizOps Chief Financial Officer