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American Rescue Plan – Restaurant Revitalization Fund And Other Provisions

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On March 11, 2021, President Biden signed into law a $1.9 trillion COVID-19 relief bill known as the American Rescue Plan which intends to provide substantial financial assistance to individuals and small businesses. With a relief package of this magnitude, there are a large number of financial aid provisions. Two of the most notable include the $1,400 stimulus checks for Americans and specific relief for restaurants.

$1,400 Stimulus Checks

The American Rescue Plan included a third round of relief to individuals in the form of $1,400 stimulus checks being paid to Americans with adjusted gross incomes up to $75,000 for individuals and $150,000 for married couples filing jointly. Similar to the prior stimulus checks, the payments are reduced for those above these limits and fully phase out for individuals making $80,000 and $160,000 for married couples filing jointly.

Restaurant Revitalization Fund

Restaurants that have been drastically and disproportionately impacted by the COVID-19 pandemic have been asking for relief and now they have it. The American Rescue Plan includes a $28.6 billion “Restaurant Revitalization Fund” (RRF) that provides tax-free federal grants to eligible businesses through the U.S. Small Business Administration (SBA). Of the total grants available under the RRF, $5 billion has been allocated to businesses with gross receipts of $500,000 or less during 2019 and the remaining $23.6 billion will be available for the SBA to award to businesses equitably based on annual gross receipts.

Who Is Eligible?

Restaurants and similar businesses with the primary purpose of serving food or drink such as food stands/trucks/carts, bars or taverns, taprooms, brewpubs and tasting rooms that are not publicly-traded and own or operate 20 or fewer locations (including affiliated businesses) as of March 13, 2020 are eligible. Entities applying for grants must submit a good faith certification that (1) the uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations and (2) the entity has not applied for or received a grant under the “Shuttered Venue Operators” grant.

Additionally, in an initial 21-day period, the SBA will prioritize awarding grants for businesses owned and controlled by women, veterans or socially and economically disadvantaged individuals.

What Is The Grant Amount?

The SBA will award the tax-free federal grants based on an entity’s pandemic-related revenue loss and reduced for any amounts already received through the Paycheck Protection Program (PPP).

RRF Grant = 2019 revenue – 2020 revenue – PPP loans

If the business was not in operation for all of 2019, the grant is equal to the difference between the annualized average monthly revenue for 2019 compared to the annualized average monthly revenue for 2020. Eligible businesses that were not in operation until 2020, can receive a grant equal to the amount of eligible expenses less 2020 revenue. For businesses that are not yet in operation as of the application date, but have eligible expenses, the grant would be equal to the eligible expenses.

The maximum grant amount for an eligible business and related affiliates is $10 million and limited to $5 million per physical location of the business. Further, the SBA is able to adjust awards based on demand and relative local costs in the market where the business operates.

What Are Eligible Expenses?

Eligible expenses include payroll, principal and interest on mortgage obligations, rent, utilities, maintenance (including construction to accommodate outdoor dining), supplies for protective equipment and cleaning materials, normal food and beverage inventory, operational expenses, paid sick leave not covered under other federal programs and any other expenses the SBA determines to be essential to maintaining operations.

For businesses, supporting restaurants is now 100% tax deductible through the end of 2022, instead of the prior 50% limitation.

Other Provisions

Additional provisions in the American Rescue Plan include:

  • An additional $7.25 billion for the Paycheck Protection Program. See additional information here.
  • Extension of the Employee Retention Tax Credit (ERC) through December 31, 2021 – see prior blast here.
  • Extension of family and sick leave credits under the Families first Coronavirus Response Act (FFCRA) – see prior blast here.
  • Extension of the Work Opportunity Tax Credit
  • $15 billion to the Economic Injury Disaster Loan (EIDL) grant program
  • $1.25 billion for the SBA’s Shuttered Venue Operators Grant Program
  • Expanded child tax credit
  • And More!

For more information or assistance, please contact your Berntson Porter representative at 425-454-7990. We are here to help!

Berntson Porter is here to help businesses navigate these challenging times. Visit our Resource Center for up-to-date information about COVID-19 legislation that impacts you and your business.