Smaller Restaurants Alert – New Relief Funds Available

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Pandemic Relief for Restaurants

Smaller restaurants and bars soon will have a new opportunity for pandemic-related relief when the U.S. Small Business Administration posts the application for the new Restaurant Revitalization Fund, a program created as part of the American Rescue Plan Act of 2021 signed by President Biden on March 11.

As of this posting, the application had not been made available; however, those eligible should keep checking this page or watching out for announcements and be ready to pounce.

That’s because Section 5003 of the Rescue Plan Act sets aside $28.6 billion for restaurants, bars and other food or beverage dispensing entities, including caterers, saloons, tasting rooms, brewpubs and food stands, trucks or carts who can show that their business has been adversely impacted by COVID-related shutdowns or limitations on density.

For the first 60 days after the signing of the Act—until May 10 as of now, although that deadline can be extended by the SBA—$5 billion of those funds are earmarked for businesses with gross receipts of $500,000 or less in 2019. In addition, for the first 21 days after the application becomes available, dibs will go to women-owned, veteran-owned and “socially and economically disadvantaged” small businesses—a/k/a 8(a) small businesses.

The remainder of the $28.6 billion must be divided “in an equitable manner,” according to the Act, although no single business and its affiliates (defined as the business having majority ownership or contractual authority to run day-to-day operations) can receive more than $10 million, and no one physical location can receive more than $5 million.

Grants from the Restaurant Revitalization Fund can be spent on essentially the same range of expenses detailed in the original Paycheck Protection Program, as long as the applicant can certify that “the uncertainty of current economic conditions” makes the grant necessary to support ongoing operations. To date, the SBA has not said whether the grant application must be based on a percentage of payroll-related vs. other types of spending.

To demonstrate pandemic-related revenue loss is simple enough if the restaurant or bar has been in business since at least January 1, 2019. In that case it’s simply the difference in gross receipts for 2019 and 2020. If the entity opened its doors during 2019, it’s based on the difference in monthly average for the two years, multiplied by 12. For restaurants or bars that opened in 2020 or early 2021 (prior to March 11), it’s based on eligible expenses minus gross receipts earned. The Act gives SBA some leeway on setting calculations for the latter two groups, however.  

Prior PPP funds that the restaurant or bar have or will receive reduces the grant amount, so those who have gotten such loans might be better off applying for the previously offered Shuttered Venue Operators Grant. Shuttered Venue grants are also reduced by PPP funds but only those received on or after December 27, 2020. 

Importantly, small restaurants and bars cannot receive both a Restaurant Revitalization Fund grant and a Shuttered Venue Operators Grant. But if the former seems like your better bet … again, you will need to check this page to see when the application becomes available.