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Stimulus throws restaurants a lifeline with new grant program
The Restaurant Revitalization Grant makes up for lost revenue during COVID-19.
The third coronavirus stimulus act is establishing a new grant program for restaurants that have suffered a loss from the pandemic. The American Rescue Plan Act passed the House of Representatives Wednesday and is expected to be signed into law by the end of the week. Here’s how the Restaurant Revitalization Fund works.
What is the Restaurant Revitalization Fund?
The Restaurant Revitalization Fund is a $25 billion grant program for restaurants and other food service businesses that have been affected by coronavirus outbreak-related shutdowns.
Restaurants can apply for a total of $10 million — or $5 million per physical location — based on their revenue losses during the pandemic. Since it’s a grant, you don’t have to pay it back or apply for forgiveness, unlike previous coronavirus assistance programs.
You don’t need to have a sit-down establishment to get a Restaurant Revitalization Grant. The following types of businesses can qualify for this program:
- Food stands
- Food trucks
- Food carts
- Tasting rooms
- Tap rooms
Any other business where people primarily assemble for food or drink can also qualify, like a vineyard or distillery. This also includes businesses that are located in airports or tribally-owned land — usually outside of the federal government’s reach.
Businesses that received a loan through the Paycheck Protection Program (PPP) or the Economic Injury Disaster Loan (EIDL) program can still qualify for this grant. But a PPP loan will reduce how much you’re eligible to receive.
Even if your business falls into one of the eligible categories, the following types of businesses can’t qualify for the Restaurant Revitalization Fund:
- State or local government-operated businesses
- Businesses owned or operated with more than 20 locations as of March 13, 2020
- Businesses that received a shuttered venue grant
- Public companies
Calculating your grant amount
While grants max out at $10 million, how much you receive depends on the revenue your business lost due to the coronavirus outbreak and if it received a PPP loan.
Businesses that were established before January 1, 2019, can calculate their grant amount by subtracting your 2020 gross receipts from your 2019 gross receipts.
Businesses that were established during 2019 can receive a grant equal to the difference between:
- Average monthly 2019 gross receipts, multiplied by 12
- Average monthly 2020 gross receipts, multiplied by 12
Businesses that were established on or after January 1, 2020, can receive a grant equal to eligible payroll expenses, less gross receipts from that year.
The Small Business Administration (SBA) might also release another formula for businesses established in 2019 or 2020 once the program is up and running. And if your business received a First or Second Draw PPP loan, you’re required to subtract those amounts from the grant.
What’s an eligible payroll cost?
The SBA uses the same definition of payroll costs as it does for the PPP when it comes to determining your grant amount — with a few exceptions. You can’t count any wages you wrote off to get the Employee Retention Tax Credit toward your Restaurant Revitalization Grant. Same applies to COBRA-related healthcare premiums that you deducted from your taxes.
How to apply
The Restaurant Revitalization Fund will be available through the SBA, though it hasn’t yet released an application or set up a portal where you can apply. However, applications will only be available to a limited group of businesses for the first 21 days.
- Women-owned businesses
- Veteran-owned businesses
- Socially or economically disadvantaged businesses
After the first 21 days, all eligible businesses have until December 31st to apply for this grant program.
How you can use the funds
You can use the funds to cover any of the following types of expenses that your business incurred between February 15, 2020, and December 31, 2021.
- Payroll expenses
- Mortgage payments, including principal and interest
- Construction of an outdoor seating area
- Maintenance of walls, floors, fixtures, furniture, deck surfaces and equipment
- Supplies — including personal protective equipment and cleaning supplies
- Food and beverage expenses you would have incurred under normal circumstances
- Paid sick leave
- Operating expenses
- Supplier costs
The American Rescue Plan Act also leaves room for the SBA to add expenses that are covered by this grant program. If you have any money left over after covering your eligible expenses, you’re required to return the remaining funds.
Other resources for restaurant owners
The Restaurant Revitalization Fund isn’t the only grant program that food service businesses can apply for. Before you apply, make sure your business doesn’t qualify for more funds through the Shuttered Venue Operators Grant (SVOG).
If your business already received a PPP loan, it might be eligible to receive more funds through the Second Draw loan program thanks to a new formula for the accommodation and food service industry. Or consider a First Draw PPP loan. You have until March 31st to apply and can still receive a Restaurant Revitalization Grant to cover expenses the PPP doesn’t.
Also be on the lookout for how this program will affect eligibility for local grant and loan programs. Sometimes these smaller programs only offer funds to businesses that haven’t received federal funding.
Apply for a Paycheck Protection Program loan today
Below is a list of online lenders offering SBA Paycheck Protection Program loans. We recommend applying as soon as possible, since funds are available on a first-come, first-served basis. Get help filling out the application with our guide.
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