Restaurant Revitalization Fund provides grants to eligible businesses

For the restaurants and bars affected by the economic impact of COVID-19, the Restaurant Revitalization Fund (part of the American Rescue Plan Act) was established to provide grant funds to eligible businesses according to gross revenue loss. This article will cover some of the key areas of the program. To start, let's cover who exactly is eligible under the RRF. "Eligible entities include a 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.” (restaurantact.com).

A total of $28.6 billion is being allocated for this program, and according to the information recently updated, $5 billion of that will be reserved for business with gross receipts of $500,000 or less during 2019. This will ensure that smaller businesses will not be left out. The program is also initially prioritizing a 21-day period to award grants for small business concerns owned and controlled by women, veterans, and socially and economically disadvantaged small businesses.

The RRF will calculate grant amounts based on specific factors that can be separated into four categories:

a. Businesses with gross receipts in 2019 and 2020. These will be subtracted to calculate the gross revenue loss in 2020.

b. Businesses not in operation for the entirety of 2019. “The total is the difference between 12 times the average monthly gross receipts for 2019 and the average monthly gross receipts in 2020 (or a formula from SBA)” (restaurantact.com).

c. Businesses not in operation until 2020. In this case, the business can receive a grant equal to the amount of "eligible expenses" subtracted by its gross receipts (or a formula from SBA). For information on which expenses are acceptable, please visit www.restaurantact.com.

d. Business not yet in operation by the application date BUT have made “eligible expenses.” The RRF would be made equal to those expenses (or a formula from the SBA).

Note: *Any awarded PPP loans (first and/or second draw 2020/2021) will be deducted from the total revenue loss.

Finally, here are some additional key takeaways from information recently updated.

· Grants are not taxed like income, and all normal federal tax deductions are protected.

· "Eligible expenses" are those incurred from Feb 15, 2020, to Dec 31, 2021, or a date determined by the SBA. For the list of expenses, please visit www.restaurantact.com.

· Entities must submit a good faith certification that: Uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations. The entity has not applied for nor received a “Shuttered Venue Operators” grant (generally for performing arts, live venues, theaters, etc.).

“Business Tips” was written by Alejandro Castanon, Business Development Specialist of Angelo State University’s Small Business Development Center.  For more information on the topic of this article or the services of the ASU · SBDC, contact her at Alejandro.Castanon@angelo.edu.