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New Restaurant Aid: How to Qualify for New Stimulus Funding

Posted by Concannon Miller on Thu, Mar 18, 2021

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Baker pouring flour into large mixer in a commercial kitchenThe new federal stimulus bill (American Rescue Plan Act of 2021) includes a special fund – the new $28.6 billion Restaurant Revitalization Fund – to benefit the hard-hit restaurant industry by providing grant monies in addition to the Paycheck Protection Program loans and other pandemic relief measures.

While we await additional guidance from the SBA, here are the details that are currently available (subject to change).

What are the Qualification Rules?

Restaurants with 20 or fewer locations. While independent restaurants are the priority for receiving grants, franchisees with 20 or fewer locations that are not publicly traded companies can also apply.

The grants intended to cover your pandemic-related revenue loss in 2020. As a result, you will need to provide details that show your revenue declines in 2020 compared to 2019.

READ MORE: Third Stimulus Extends Popular Business Tax Credit, Provides Restaurant Funding

How are Grant Amounts Calculated?

  • Businesses that were established before January 1, 2019, can calculate their grant amount by subtracting their 2020 gross receipts from their 2019 gross receipts.
  • Businesses that were established during 2019 can receive a grant equal to the difference between:
    • Average monthly 2019 gross receipts, multiplied by 12
    • Average monthly 2020 gross receipts, multiplied by 12
  • Businesses that were established on or after January 1, 2020, can receive a grant equal to eligible payroll expenses, less gross receipts from that year.

How Does Previous Pandemic Relief Factor in, including PPP and ERTC?

  • If you received a PPP #1 or PPP #2 loan, you’re required to subtract the amounts received, whether or not forgiven, from your grant request. You also cannot count any wages eligible for the Employee Retention Tax Credit.

READ MORE: Many More Businesses Now Eligible for COVID Employee Retention Tax Credits

How Much Money Can You Receive?

  • The maximum grant amount is $10 million per applicant/affiliated group, or $5 million per physical location.

What Can the Money be Used for?

The grants can be used for many operational expenses, including payroll, mortgage and rent payments, utilities, supplies, maintenance, PPE, cleaning supplies and construction of outdoor seating. The money must be used for qualified expenses between Feb. 15, 2020 and Dec. 31, 2021, but the period may be extended.

What Types of Establishments Can Qualify?

Restaurants, food stands, food trucks, food carts, caterers, saloons, inns, taverns, bars, lounges, brewpubs, tasting rooms, tap rooms or any other business where people primarily assemble for food or drink can also qualify, like a vineyard or distillery.

How to Apply?

The grants will be issued through the U.S. Small Business Administration. Additional details are not yet available but officials have said they expect grant applications to open within a matter of weeks. Check back on the SBA’s website at SBA.gov.

Who Will Get Funding First?

The fund includes several rules to give priority to small restaurants and those owned by women, veterans and disadvantaged owners:

  • For the first three weeks of the program, the SBA will prioritize distributing grants to restaurants owned by women, veterans or are otherwise socially and economically disadvantaged.
  • For the first two months of the program, $5 billion of the $28.6 billion fund is reserved for restaurants with less than $500,000 in annual revenue for 2019.
  • The SBA Administrator can also create additional allocation tiers.

Next Steps

As additional guidance is provided by the SBA on this program we will be sure to provide you with any and all updates. If you should have any initial questions, please contact us. We’re here to help you through these challenging times.

Topics: McDonald's management, Restaurants

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

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