Restaurant Relief Grant
Do you enjoy dining out and visiting with your local restaurant and bar owners along with other folks in your community? It’s a nice way to have a family experience when you don’t feel like cooking at home.
With COVID, that privilege has been decimated due to a number of reasons.
The restaurant may have gone out of business.
You’re fearful of the risks of being out and about.
These are valid concerns.
The restaurant owner has been negatively impacted like many of us. There are a few things happening in the restaurant business that you may not have considered:
- It’s very difficult, if not impossible, to be an online business.
- If a restaurant owner hasn’t closed, don’t think they aren’t struggling. Their finances have taken a massive hit. Expenses to stay open have increased dramatically.
- They’re paying exorbitant fees to deliver food and/or to meet social distancing requirements to accommodate dine-in patrons.
- They are operating at a fraction of capacity due to social distancing pandemic guidelines.
ESSENTIALS of the Program
There’s $25 billion earmarked for this program.
The Small Business Administration (SBA) will administer the program.
As business financing brokers, we know how difficult it is to secure working capital through traditional lending channels. Those channels are not available due to COVID.
Without federal relief, local restaurants around the country could end up closing their doors for good.
The American Rescue Plan includes a grant program to support restaurants hit hardest by the pandemic.
Free 15 Minute Phone Consultation with our expert team.
How to Calculate Your Grant Amount
A. Established Restaurants: 2019 revenue minus 2020 revenue minus PPP loans
B. Restaurants opened in 2019: Average of 2019 monthly revenues times 12 minus 2020 revenues
C. Restaurants opened in 2020: Eligible to receive funding equal to eligible expenses incurred
$10 million per restaurant group, $5 million per individual restaurant
- Payroll and benefits (not including employee compensation exceeding $100,000/year)
- Mortgage (no prepayment)
- Rent (no prepayment)
- Supplies (including protective equipment and cleaning materials)
- Operational expenses
- Covered supplier costs as defined by the SBA under the PPP program
- Sick leave
- Any other expenses deemed essential by the Administrator
Grants can be spent on eligible expenses from the dates 2/15/20 through 12/31/21 and the Administrator may extend the period through two years from enactment if conditions warrant.
- Food service or drinking establishments, including caterers, brewpubs, taprooms, and tasting rooms
- You are not an affiliated group with 20+ locations.
- You are not an entity that is publicly traded
- You do not have a pending application under the Save our Stages program
- There are limits on the participation of private equity funds
- You need to obtain a DUNS number and register for SAM. Links provided.
- If you cannot use your full grant on eligible expenses, you must pay back the government with the unused portion of the grant.
- Recipients must certify that the current economic conditions make the grant request necessary, and the funds will be used to retain workers, maintain payroll, and make other payments (as specified in the eligible expenses list above), and that the recipient is only applying for and would only receive one grant.
SBA must first establish rules for the program, after which applications will begin to be made available. Once that is determined and publicly announced, we will know when to begin to submit applications.
How to Prepare Ahead of Time
You need a Data Universal Numbering System (DUNS) number and be registered with the System for Award Management (SAM). You will not be able to apply or receive payments without establishing your business in both of these systems.
Registration will take time to process, so please make sure you get this done ASAP so that when grants do become available you’ll be well prepared to apply.
DUNS and SAM are free.
To register for SAM you first must create an account at login.gov. Then you’ll need to go to the SAM website and log in using the new account you just created at login.gov. Please note that when asked why you are registering, the correct response is “To apply for Federal financial assistance opportunities only”
There is no guarantee that you’ll receive the grant. We do not know how long it will take to process grant applications.
Q: How do I calculate the amount of grant funding if I opened in 2020?
A: For restaurants that opened in 2020: You are eligible to receive funding equal to eligible expenses incurred in 2020.
Q. Do we use gross revenue or net revenue when calculating the difference in revenue from 2019 and 2020?
A. Use gross revenue within your calculation.
Q. Does my Employee Retention Tax Credit (ERTC) or EIDL Loan get deducted from the total amount of the grant?
A. No, only PPP funds are deducted from the total.
Q. Are the grants treated as taxable income by the IRS?
Q. When does the grant program expire?
A. The covered period ends on December 31st, 2021 unless the SBA Administrator or Congress extends the date.
Q. What happens if the $25 Billion runs out?
A. It would have to go before Congress to replenish the grant but there’s no guarantee that will happen or how quickly that would happen.
We want to thank the Independent Restaurant Coalition for their efforts and insight.