American Rescue Plan Restaurant Relief

On March 11, 2021, President Biden signed the American Rescue Plan into law. This plan allocated billions of dollars to the Small Business Administration (SBA) to continue previously implemented measures like PPP loans and EIDL loans. In addition to these programs, congress enabled the SBA to administer funds designed to target sectors of the economy—such as restaurants—that were significantly impacted by the COVID-19 pandemic.  

One such new program is the Restaurant Relief Revitalization Fund which received $28.6 billion to help struggling businesses in the food service industry. This program is headed up by the SBA and will soon make industry-focused grants available for qualifying businesses.

Although it is not yet clear when restaurants will be able to apply for this relief, the SBA has outlined some of the qualifications required for obtaining a grant, the documentation that restaurants will need to supply, how much relief restaurants might receive.

Who is Eligible for Relief Funds?

The full description of precisely what establishments qualify for relief funds can be found in the text of the American Rescue Plan. Some of the qualifying entities included in the plan are restaurants, food stands, food trucks, food carts, caterers, taverns, bars, lounges, brewpubs, tasting rooms, and taprooms. Restaurant relief funds specifically target small businesses with these funds, which means any publicly traded companies are ineligible.

Relief is also not available for entities that operate more than 20 locations, regardless of whether those locations operate under the same name or not. Other than these qualifications, any food-service business should soon be able to apply to the SBA to receive grants from the Restaurant Relief Revitalization Funds.

The full description of precisely what establishments qualify for relief funds can be found in the text of the American Rescue Plan. Some of the qualifying entities included in the plan are restaurants, food stands, food trucks, food carts, caterers, taverns, bars, lounges, brewpubs, tasting rooms, and taprooms. Restaurant relief funds specifically target small businesses with these funds, which means any publicly traded companies are ineligible.

Relief is also not available for entities that operate more than 20 locations, regardless of whether those locations operate under the same name or not. Other than these qualifications, any food-service business should soon be able to apply to the SBA to receive grants from the Restaurant Relief Revitalization Funds.

Relief funds are still available for restaurants and eateries that opened after 2019. However, the calculations for determining to what degree revenue was impacted by the pandemic will be determined by the administrator in those cases.

How Much Relief Could Restaurants Receive?

As previously stated, relief funds allocated to the SBA for grants are designed to help businesses recoup losses incurred as a direct result of COVID-19. The amount of money that a restaurant will be eligible for, then, partly depends on their ability to show substantial loss through receipts and financial records. In general, the plan does specify that there is a maximum relief threshold of $10 million in total and a $5 million limit per physical location for grant funds regardless of how much loss was incurred.

The text of the bill also extensively outlines what businesses can use these funds on. Some of the appropriate uses of grant funds described in the bill are payroll costs, payments of principal or interest on any mortgage obligation, rent payments, utilities, maintenance expenses, supplies, food and beverage expenses, covered supplier costs, operational expenses, paid sick leave, or any other necessary costs that a grant administrator approves.

It is also important to note that grant funds that are not used by eligible entities before the last day of the covered period, or if restaurants cease operations before using the total amount of their grant funds, then these funds must be returned to the Treasury.