Restaurant Revitalization Fund Offers Tax-Free, Federal Grants to Eligible Businesses in the Food and Beverage Industry Impacted Negatively by the COVID-19 Pandemic

By: Roy Tilsley, Eviana (Englert) Woodlinn and John J. Moran

IN BRIEF

On March 11, 2021, The American Rescue Plan Act of 2021 established the Restaurant Revitalization Fund (“RRF”), which provides tax-free, federal grants to eligible businesses in the food and beverage industry that were impacted negatively by the COVID-19 pandemic. Like the Paycheck Protection Program (“PPP”), the RRF will be facilitated by the U.S. Small Business Administration (“SBA”).

RRF Overview

The RRF offers an eligible food and beverage business with a tax-free, federal grant that matches the eligible business’s revenue loss(es) resulting from the COVID-19 pandemic – up to ten million and 00/100 dollars ($10,000,000.00) per eligible business and up to five million and 00/100 dollars ($5,000,000.00) per physical location of an eligible business. Any federal grant under the RRF will be reduced by any funds already received through the PPP. If an eligible business receives a federal grant under the RRF, then the eligible business will not be required to repay that federal grant, so long as the eligible business uses the federal grant for eligible uses (i.e., certain business expenses, construction expenses, or business debt) by March 11, 2023. If any portion of the federal grant is not used for an eligible use by March 11, 2023, then the unused portion must be returned.

How to Apply?

Beginning at 9:00 A.M. today (April 30th), eligible food and beverage businesses may register to apply for the RRF. On Monday, May 3rd beginning at 12:00 PM, eligible food and beverage businesses that have registered for the RRF may submit their applications for the RRF via the online application portal, which is accessible here.

Who is Eligible for the Funds?

The eligible businesses in the food and beverage industry that were impacted negatively by the COVID-19 pandemic may include, without limitation, the following businesses:

• Bakeries (on-site sales to the public must comprise at least thirty-three percent (33.00%) of gross receipts);
• Breweries, wineries, cideries, and distilleries* (on-site sales to the public must comprise at least thirty-three percent (33.00%) of gross receipts);
• Brewpubs, tasting rooms, and taprooms* (on-site sales to the public must comprise at least thirty-three percent (33.00%) of gross receipts);
• Caterers;
• Food stands, food trucks, and food carts; bars, saloons, lounges, and taverns; snack and non-alcoholic beverage bars (e.g., coffee shops, ice cream shops, etc.);
• Inns* (on-site sales to the public must comprise at least thirty-three percent (33.00%) of gross receipts);
• Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products;
• Restaurants; and
• Other similar places of business in which the general public or patrons assemble for the primary purpose of being served food or drink on-site.

The eligible businesses referenced above that do not have an asterisk next to them are presumed to have on-site sales to the public comprising at least thirty-three percent (33.00%) of gross receipts. In addition to the other application requirements, any eligible business that applies for a federal award under the RRF must certify that “current economic uncertainty makes this funding request necessary to support the ongoing or anticipated operations”.

What are Eligible Uses of Funds?

Any federal award under the RRF may be used for certain eligible uses, which are categorized as “business expenses,” “construction expenses,” and “business debt,” as follows:

(a) Business Expenses

• • Business payroll costs (e.g., sick leave)
  • Business utility payments
  • Business maintenance expenses
  • Business supplies (e.g., protective equipment and cleaning materials)
  • Business food and beverage expenses (e.g., raw materials)
  • Covered supplier costs
  • Business operating expenses (e.g., legal fees, insurance, marketing, fees, licenses, POS equipment, etc.)

(b) Construction Expenses

• • Construction of outdoor seating
  • Expansion costs are not an eligible use

(c) Business Debt

• • Regularly-scheduled payments on any business mortgage obligation (both principal and interest), which means that any prepayment of principal or interest is not an eligible use
  • Business debt service (both principal and interest), which means that any prepayment of principal or interest is not an eligible use.

What is an “Ineligible” Use of Funds?

According to an SBA spokesperson, grant recipients cannot use funds on business expansion (e.g., one of the SBA administrators stated that it would be acceptable to renovate a damaged food truck, but not to purchase an additional food truck for one’s fleet; similarly, a restaurant may use funds to expand its outdoor dining area, but it may not use funds to construct a new restaurant at a different location).

Bottom Line

For more information about the RRF and whether your business is eligible to apply for a federal award under the RRF, please contact Roy Tilsley, Eviana (Englert) Woodlinn or John J. Moran. In addition, please see the SBA’s website for more information. To learn more about our Food and Beverage Group, please click here.