The American Rescue Plan Act -- all $1.9 trillion of it -- signed into law today by President Joe Biden, includes $25 billion in direct aid to America’s food service and drinking establishments in the form of Restaurant Revitalization Fund grants.
Unlike the Paycheck Protection Program, these are not loans, but like the PPP program, the Small Business Administration will be administering the payouts, although it appears it will be direct this time, not applications through banks and credit unions.
Also, publicly traded companies are excluded this time around, as is “any entity with 20 or more locations, including through affiliates.”
Estimates say more than 110,000 restaurants had already closed because of the coronavirus pandemic, throwing millions of people out of work and hitting the bottom line of the owners of those properties, including landlords of businesses that have survived but are struggling mightily with reduced hours and reluctance for diners to step in and sit down.
Take it for granted, these are not forgivable loans
Soon after Biden signs the bill, the SBA should be issuing guidance on how exactly to apply. But there’s lots to know now, including, again, that this is not a forgivable loan. No, these are grants.
And they can be big ones. According to the text of the bill approved by the Senate, they can be up to $10 million to "an eligible entity and any affiliated businesses of the eligible entity," limited to $5 million for any single physical location.
Eligibility and amount will be based on annual gross receipts from 2019. Another important point here. It’s based on 2019 gross receipts, not 2020.
Of that pool, $5 billion will be available to eligible businesses with gross receipts of no more than $500,000 that year, the bill says, and $20 billion "shall be available to the administrator to award grants in an equitable manner to eligible entities of different sizes based on annual gross receipts." Lots of flexibility there.
And here’s who the Senate language says is covered: “restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink."
Women and veterans, step to the head of the line
In the first 21 days, priority will be given to businesses owned and controlled by women, veterans, and socially and economically disadvantaged small business concerns, the measure says.
The Independent Restaurant Coalition says the revitalization fund will also:
· Give restaurants and bars the means to make payroll, pay down debt, and cover other vital eligible costs.
· Allow restaurants and bars more flexibility to decide how and when to reopen whenever it’s safe in their own community.
· Encourage small businesses to begin hiring back the 2 million restaurant and bar workers who lost their jobs during the pandemic.
Every restaurant that lost money during the pandemic should apply
Mike Krueger, a partner with Newmeyer Dillion in Walnut Creek, California, says:
“This grant program should be utilized by every restaurant that has incurred a loss due to the pandemic. This program is a grant for restaurants, and the expenses the funds can be used to cover are much broader than the PPP program requirements. ‘Operational expenses’ is a broad category.”