Restaurants, food stands, caterers, wineries, distillery owners and others are crossing their fingers that they can get a chance at the Restaurant Revitalization grants, a new $28.6 billion program for eligible entities to receive a grant equal to the amount of the loss incurred during the pandemic.
What are the parameters for the grant?
An eligible entity can apply for a tax-free federal grant equal to the amount of its pandemic-related revenue loss, which is calculated by subtracting its 2020 gross receipts from 2019 gross receipts. PPP loan forgiveness is included in gross receipts.
- If the business was not in operation for the entirety of 2019, the total is the difference between 12 times the average monthly gross receipts for 2019 and the average monthly gross receipts in 2020 (or using a formula from the SBA).
- If the business was not in operation prior to 2020, it can receive a grant equal to the amount of eligible expenses subtracted by its gross receipts received (or using a formula from the SBA)
- If the business wasn’t in operation as of the application date, but has eligible expenses, the grant will be made equal to those expenses (or a formula from the SBA)
What is the covered period for the grant?
Eligible expenses are those incurred from February 15, 2020 to December 31, 2021, or a date determined by the SBA. If the grant funds are not spent by the business or the business permanently closes before the end of the period, the business has to return any unused funds.
Who is eligible for the program?
Business owners who own or operate 20 or fewer establishments (together with any affiliated business), regardless of ownership type of the locations and whether those locations do business under the same or a different name, as of March 13, 2020. Furthermore, an affiliated business has equity or right to profit distribution of 50 percent or more or has contracted authority to control the direction of the business, provided that such affiliation is determined in agreements in existence as of March 13, 2020.
In addition to restaurants, wineries, and distilleries that serve food are eligible as are Tribal-owned facilities and also food operations located in airports. Entities can apply using their existing business identifiers, as the SBA will avoid imposing additional burdens on applicants. Publicly traded companies are not eligible. Also, entities applying must submit good faith certification that the volatile economic conditions make the grant necessary and also that the entity has not applied or received a “Shuttered Venue Operators” grant (generally for theaters, performing arts, and live entertainment venues).
How can owners use the grants?
Owners must use the grants for payroll costs, payments of principal and interest for mortgage obligations, utilities, rent, operational expenses, paid sick leave and any other categories approved by the SBA.
Who is excluded from the program?
The Restaurant Revitalization Act excludes state and locally owned government businesses.
If you have questions about the Restaurant Revitalization Act, please contact your Mize CPAs professional.