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American Rescue Plan Introduces Restaurant Revitalization Fund—How You Can Benefit

March 25, 2021

Attention restaurants…the recently passed American Rescue Plan brings much needed relief to the hospitality industry through The Restaurant Revitalization Fund. Here’s what you should know.

Have you read our blog, Biden Signs the American Rescue Plan: What’s Inside? The Act brings much needed financial aid to individuals and businesses, including welcomed relief for the hospitality industry. The Restaurant Revitalization Fund, introduced by the Act, provides $28.6 billion in cash grants to restaurants. Wondering how you can benefit? We explain here.

What’s inside the American Rescue Plan?

Check out our blog for the details, but in a nutshell the bill provides:

  • $1,400 stimulus checks
  • Additional $7.25 billion in PPP funding
  • ERC extended through 12/31/2021
  • Employee benefits extended and additional $300 per week for unemployment
  • Expanded child tax credits
  • Restaurant Revitalization Fund

What is the Restaurant Revitalization Fund?

The $28.6 billion fund allows eligible businesses to receive a tax-free federal grant equal to the amount of their revenue loss related to the pandemic.

What businesses are eligible?

The new law targets smaller restaurant groups of 20 or fewer units, regardless of ownership type of the locations or whether the locations do business under one or multiple names (as of March 13, 2020). The fund provides up to $5 million grant per unit, and up to $10 million per restaurant affiliated group.

Eligible entities include:

  • Restaurants, food stands, food trucks, food carts, caterers, saloons, inns, taverns, bars, lounges, brewpubs, wineries, breweries, tasting rooms, taprooms, and any place or business where food and drink is served.

Note that publicly traded companies are ineligible.

What expenses are eligible?

Eligible expenses must have been incurred from February 15, 2020 to December 31, 2021 (unless otherwise determined by the SBA). The funds must be spent on:

  • Payroll
  • Principal or interest on mortgage obligations
  • Rent
  • Utilities
  • Typical food and beverage inventory
  • Certain covered supplier costs
  • Operational expenses
  • Paid sick leave
  • Maintenance (i.e., construction, creating outdoor seating, etc.)
  • Supplies (cleaning materials, protective equipment, etc.)
  • Any other expenses the SBA determines are essential to continue operations

How is the grant calculated?

The grant is equal to the amount of your business’ pandemic-related revenue loss. It’s calculated by subtracting your 2020 gross receipts from your 2019 gross receipts. That total is then reduced by all amounts received under PPP in 2020 and 2021

Here are some things you should note:

  • If your business was not operating for all of 2019, the total of your grant would be the difference between 12 times the average monthly gross receipts for 2019 and the average monthly gross receipts in 2020
  • Were you not in operation until 2020? You are eligible to receive a grant equal to the amount of eligible expenses minus gross receipts received.
  • Not yet in operation as of the application date? If you made eligible expenses, the grant would be made equal to those expenses.

If your business does not spend all the funds or closes before the end of the covered period, you must return unused funds to the Treasury.

What is the covered period?

Expenses incurred from February 15, 2020 to December 31, 2021 are eligible.

Are the grants taxable?

The grants are tax free, for federal purposes. Some states may treat the grants as taxable income.

Questions? Contact us.

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