The SBA expects an early April roll-out
The Food & Beverage industry had to make a sharp pivot to try and stay in business during the pandemic. In addition to the shelter-in-place orders, the necessary accommodations these business owners had to make were unexpected (burdensome) expenses. Last year, the National Restaurant Association pushed Congress to create a specific recovery fund due to the unique challenges restaurants faced. As a result, The American Rescue Plan Act of 2021 (ARPA) established a $28.6B Restaurant Revitalization Fund (RRF), and $5B is reserved for businesses with gross receipts of $500,000 or less in 2019.
Are you eligible?
The RRF is intended for these entities:
This includes all airport locations. In addition, licensed facilities or premises of a beverage alcohol producer are eligible (where the public may taste, sample, or purchase products or other similar places of business in which the public or patrons assemble for the primary purpose of being served food or drink). Application for the Grant must include certifications that 1) uncertainty of current economic conditions makes necessary the grant request to support ongoing operations, and 2) the applicant has not applied for nor received a Shuttered Venues Operations Grant (SVOG). Publicly traded companies are ineligible.
How much is the Grant?
Assuming the business was in operation in all of 2020 and 2019, you would calculate the eligible Grant by deducting the 2020 gross receipts from 2019 gross receipts subtracting any amounts received under a first or second draw PPP loan. If the business started in 2019 or 2020, there are formulas for calculating the amount of Grant eligible. The Grant is limited to $5 million per location or $10 million in total, including affiliated businesses.
What can I use the Grant for?
The funds can be applied toward:
How do I apply?
During the initial 21-day period, the SBA will prioritize grants to entities owned and controlled by women, veterans, or socially or economically disadvantaged small business concerns. Applicants should ensure they have a DUNS number and register with the System for Award Management (SAM), as these will be required to apply for the Grant. The SBA recently said the grant application period would open in early April. It is required to open within 60 days of the ARPA becoming law, therefore by May 9th at the latest. While not yet clear, we expect that expenses used in PPP loan forgiveness and Employee Retention Credit, and other credits will not be eligible for grant purposes.
Are there any strings attached?
The grants are non-taxable. Federal grants of more than $750,000 typically come with a Single Audit Act audit requirement. We recommend that Grant recipients establish an internal controls environment to track RRF grant expenditures in anticipation of an audit.
Please contact George Stephens at BKM Sowan Horan or other team members with any questions.