President Biden’s landmark $1.9 trillion stimulus package, known as the American Rescue Plan, was approved by the U.S. House of Representatives yesterday and has just been signed into law.
Included among the package’s many provisions is the Restaurant Revitalization Fund, which allocates $28.6 billion of grants to restaurants, bars, caterers, breweries, tasting rooms, food trucks, and groups with 20 or fewer locations. The most pertinent information regarding these grants is summarized below.
What Businesses Are Eligible to Receive the Grants?
The Small Business Association (“SBA”) will award grants to individual restaurants, bars, caterers, breweries, tasting rooms, and food trucks, or to restaurant groups with 20 or fewer locations (collectively referred to below as “Restaurants”). Restaurants that are owned by a publicly traded company are not eligible to participate in the program.
How Much Funding Will My Restaurant Receive?
Individual Restaurants are eligible for a maximum grant of $5 million. Restaurant groups may receive a maximum grant of $5 million per physical location of the business, up to a maximum of $10 million for all Restaurants combined.
Grant amounts will generally be calculated by subtracting the total of the Restaurant’s 2020 gross receipts plus any Paycheck Protection Program (PPP) from the Restaurant’s 2019 gross receipts. Grants for Restaurants that were not in operation for all of 2019 and Restaurants that opened in 2020 will be subject to different method of calculation.
When Can My Restaurant Apply for a Grant?
Restaurants can apply for a grant as soon as the SBA makes the application available. When the application process goes lives, the SBA will allocate the first three weeks of the program to prioritize Restaurants owned and operated by women, people of color and veterans.
We note that it may take some time for the SBA to get the program up and running, as is the case with the Shuttered Venue Operators (SVO) Grant program, which was signed into law on December 27, 2020 and which the SBA is still in the process of setting up.
Are There Limits on How My Restaurant Can Use the Grant?
Grant funds must be spent on payroll, employee health benefits, mortgage obligations, rent, utilities, maintenance (including construction to accommodate outdoor seating), supplies, inventory, certain covered supplier costs, operational expenses, paid sick leave, and any other expenses the SBA determines to be essential to maintaining operations (“Eligible Expenses”). Restaurants can use the grant funds to cover Eligible Expenses incurred and paid between February 15, 2020 and December 31, 2021 unless otherwise specified by the SBA (the “Covered Period”).
If all grant funds are not spent by the Restaurant by the end of the Covered Period, or if the Restaurant permanently closes before the end of the Covered Period, the Restaurant must return any unused funds to the Treasury.
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If you have questions or would like additional information, please contact our Labor & Employment Law Practice Group Leader Amanda M. Fugazy (afugazy@egsllp.com) or the primary EGS attorney with whom you work.
