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The Restaurant Revitalization Fund

By Bernkopf Goodman on 04.01.2021
Posted In: Client Alerts, COVID-19

H.R. 1319 Title V, Sec. 5003
Through the Restaurant Revitalization Fund, the federal government has finally tried to target specific economic relief to the struggling hospitality sector, specifically restaurants, bars, and entertainment venues. Prior to the Restaurant Revitalization Fund, the second draw of the Paycheck Protection Program (PPP), provided borrowers in the accommodation and food services sector with economic relief equal to 3.5x average monthly 2019 or 2020 payroll costs up to $2 million (higher than the borrowers in other industries which were only eligible for 2.5x the average monthly 2019 or 2020 payroll costs).

The American Rescue Act of 2021 established a Restaurant Revitalization Fund, which specifically targets restaurants and bars with grants (not loans). These grants are in addition to the PPP relief; however, any PPP funds received by a restaurant or bar previously will be deducted from any eligible grant amount. The SBA will be administering these funds directly, and additional information on the fund should be available on their website soon.

The Treasury allocated $28,600,000,000 in grants:

$5,000,000,000 for restaurants with gross receipts during 2019 of not more than $500,000;
$23,600,000,000 to larger restaurants.

WHO CAN APPLY FOR THE RESTAURANT REVITALIZATION FUND?
Any 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, or other similar establishments where the primary purpose is consuming food or drink may apply with a limited exception1.

CERTIFICATION
The grant process is not simple. Applicant must certify that the uncertainty of current economic conditions makes necessary the grant request to support ongoing operations of the entity, and the eligible entity is not limited by the exception in Footnote 1.

PRIORITIZATION
During the initial 21-day period in which the Administrator awards grants under this subsection, the Administrator shall prioritize awarding grants to eligible entities that are small business concerns owned and controlled by women (as defined in section 3(n) of the Small Business Act (15 U.S.C. 632(n))), small business concerns owned and controlled by veterans (as defined in section 3(q) of such Act (15 U.S.C. 632(q))), or socially and economically disadvantaged small business concerns (as defined in section 8(a)(4)(A) of the Small Business Act (15 U.S.C. 637(a)(4)(A)).

GRANT AMOUNT
No more than $10,000,000.
No more than $5,000,000 per physical location of the eligible entity.

HOW DO YOU DETERMINE GRANT AMOUNT?
The amount of the grant made to an eligible entity shall be equal to the pandemic-related revenue loss of the eligible entity.

The application must provide information on the business’s gross receipts for 2020. Any amount of a grant made based on estimated receipts that is greater than the actual gross receipts of the entity in 2020 shall be returned to the Treasury.

Pandemic Related revenue losses are reduced by the amount received from Paycheck Protection Program (PPP) and First Draw and Second Draw loans in 2020 and/or 2021.

HOW FUNDS MAY BE USED
Payroll
Mortgage payments (but not pre-payments)
Rent (but not pre-payments)
Utilities
Maintenance

Including construction to accommodate outdoor seating
Walls, floors, decks, furniture, fixtures and equipment

Supplies including PPE and cleaning materials
Normal food and beverages expenses
Covered Supplier costs (see section 7A(a) of the Small Business Act
Operational Expenses
Paid sick leave
Any other expenses that Administrator determines are essential to maintaining aneligible entity.

Return of Funds: If an eligible entity that receives a grant under this subsection fails to use all grant funds or permanently ceases operations on or before the last day of the covered period, the eligible entity shall return to the Treasury any funds that the eligible entity did not use for the allowable expenses.

DETAILS REGARDING HOW TO ACCESS FUNDS
It appears that the restaurant may need a Data Universal Numbering System (DUNS) number and be registered with the System for Award Management (SAM). These are time-consuming applications so if you plan to apply for a grant they should be started as soon as possible. We can assist you with these or you can apply for your own by clicking this link.

CONCLUSION
For many restaurants and bars, PPP loans fell short of giving meaningful relief because they had to be used for specific purposes related to keeping the establishment open for business, something many restaurants simply could not do. Hopefully, these grants will allow these establishments to adapt more readily to the changing times by adjusting their business practices to accommodate take-out, online ordering, and outdoor seating. Funds shall be available in early April.

 

1 An entity that has a pending application for or has received a grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (title III of division N of Public Law 116–260).
COVID-19 Response Team