By grant
Entities that own a place of business where the public or patrons assemble for the primary purpose of being served food or drink, including a:
• Restaurant, Food Stand, Food Truck, Food Cart
• Snack and Nonalcoholic Beverage Bar
• Caterer
• Bar, Lounge, Saloon, Tavern
• Inn
• Brewery, Brewpub, Microbrewery, Taproom, Tasting room*
• Bakery*
• Winery*
• Distillery*
• A licensed facility or premise of a beverage alcohol producer where the public
may taste, sample, or purchase products
*Eligibility may be limited for the following entities (learn more here):
The following circumstances would preclude an otherwise eligible entity from receiving an RRFG:
• As of March 13, 2020, the entity owns or operates (together with any affiliated business) more than 20 locations, regardless of whether those locations do business under the same or multiple names.
• The entity has received a Shuttered Venues Operations Grant (SVOG) or has a pending SVOG application.
• The entity is a publicly traded corporation or is majority owned and controlled by a publicly traded corporation.
• The entity does not have a place of business located in the U.S., does not operate primarily within the U.S., and does not make a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor.
• The entity is a state- or local government-owned or operated business.
• The entity is permanently closed.
• The entity filed for bankruptcy under Chapter 7 or is liquidating under Chapter 11.
• The entity has filed for bankruptcy under Chapter 11, 12, or 13 but does not have an approved plan for reorganization.
There’s no requirement for an entity to have been open before a particular date.
If an entity was not open prior to January 1, 2020, it is still eligible for RRFG. Even if an entity has not opened by the date of the application, it can apply for eligible expenses incurred in preparing to open. For entities opened or that were planning to open after January 1, 2020, the grant fund eligibility generally follows a formula similar to:
[Eligible Expenses Incurred] – [Gross Receipts] – [PPP Loans] = Grant Fund
The SBA might create a minimum grant amount of $1,000 for eligible entities. The maximum grant amount is $5M per location and $10M total for the eligible entity.
The National Restaurant Association is actively seeking this clarity in federal regulations, but current indications are that they may not be eligible.
Yes. However, the RRFG will be reduced by the total amount of PPP Loans received.
Yes, as long as they meet the other eligibility criteria. Similar to the requirements for SBA financial assistance programs, the restraints imposed on a franchisee or licensee by its franchise or license agreement generally should not be considered in determining whether the franchisor or licensor is an “affiliated business” with an applicant franchisee or licensee provided the applicant franchisee or licensee has the right to profit from its efforts and bears the risk of loss commensurate with ownership.
No. The statute included a definition for “affiliated business,” so the SBA Affiliation Rules found at 13 C.F.R. 121.301 for financial assistance do not apply.
The National Restaurant Association opposes this potential requirement and is actively seeking clarity on this issue.
Yes, as long as the RRFG applicant otherwise qualifies and the publicly traded company is not an “affiliated business” (i.e., does not have an equity or right to profit distributions of not less than 50% or the contractual authority to control the direction of the business as of March 13, 2020).
No. On March 30, the SBA clarified this in order to streamline and simplify the application process for eligible entities.
Entities that can certify that they meet the definition of a woman-owned small business, veteran-owned small business, or socially and economically disadvantaged small business will be given priority for award if their application is filed with SBA within the first 21 days the application is open for submissions. Additional access may be defined in segments according to an entity’s annual gross receipts in 2019.
No, the RRFG program is administered through the SBA.
It’s anticipated that SBA will deposit the funds directly to the bank account identified in the application.
The SBA might require disclosure of all owners with a combined equity of greater than 20%.
An entity can receive a tax-free federal grant equal to the amount of its pandemic-related revenue loss, subtracted by the total amount it received in all PPP loans.
• For entities opened before 2019:
[Gross receipts of 2019] – [Gross receipts of 2020] – [ Total amount received in PPP loans (1st and 2nd Draw)] = Restaurant Revitalization Fund Grant
• For entities opened during 2019:
[Average monthly gross receipts of 2019 multiplied by 12] – [Average monthly gross receipts of 2020 multiplied by 12] – [Total amount received in PPP loans (1st and 2nd Draw)] = Restaurant Revitalization Fund Grant
• For entities opened during 2020-2021:
[Eligible expenses] – [Gross receipts received] – [Total amount received in PPP loans (1st and 2nd Draw)] = Restaurant Revitalization Fund Grant
Aggregate grants made to an eligible entity, and any affiliated businesses of the eligible entity, are limited to $5M per physical location and $10M total for the eligible entity.
Section 1112 debt relief payments, targeted advance grants, and/or state and local small business grants (via CARES Act or otherwise) included within gross receipts for 2020? It is unlikely these emergency funds will be included in gross receipts calculations for RRFG. The National Restaurant Association is actively seeking to exclude these funds.
No. If an entity returned a Paycheck Protection Program (PPP) Loan during the Safe Harbor period, it is not deducted from the RRFG amount.
No.
No.
No. However, an entity is restricted from collecting ERTC for any “eligible wages” paid with RRFG funds.
An eligible small business concern owned and controlled by women must (1) meet the SBA’s Size Standard requirements for a small business concern; (2) be at least 51% owned by one or more women; and (3) have the management and daily business operations controlled by one or more women. The concern must also qualify as small under the SBA Size Standards corresponding to the 6-digit North American Industry Classification System (NAICS) code. Eligible applicants might need to self-certify to meet all elements of this definition and follow other criteria established by SBA.
An eligible small business concern owned and controlled by veterans must (1) meet the SBA’s Size Standard requirements for a small business concern; (2) be at least 51% owned by one or more veterans; and (3) have the management and daily business operations controlled by one or more veterans. The concern must also qualify as small under the SBA Size Standards per the 6-digit NAICS code. Eligible applicants might need to self-certify to meet all elements of this definition and follow other criteria established by SBA.
An eligible small business concern owned and controlled by socially and economically disadvantaged individuals must be at least 51% unconditionally owned by one or more socially and economically disadvantaged individuals. While this is not yet defined in regulations, both prongs of social and economic disadvantage are necessary under this statute. The concern must also qualify as small under the SBA Size Standards corresponding to the 6-digit NAICS code. We expect the SBA to follow the general regulatory requirements for socially disadvantaged individuals by requiring a self-certification that the individual(s) have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities. Individuals who are members of the following groups are normally presumed to be socially disadvantaged: Black Americans; Hispanic Americans; Native Americans (including Alaska Natives and Native Hawaiians); Asian Pacific Americans; or Subcontinent Asian Americans. Economically disadvantaged individuals are those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared with others in the same business area who are not socially disadvantaged. Eligible applicants might need to selfcertify to meet all elements of this definition and follow other criteria established by SBA.
An eligible entity can use grant funds for eligible expenses incurred from February 15, 2020 until December 31, 2021. The SBA may extend this covered period an additional 14 months, until March 11, 2023, and has the authority to extend it up to 2 years after enactment of the RRFG program.
If an entity cannot use all grant funds or permanently ceases operations on or before the December 31, 2021 (or a date extended by SBA), the entity must return the unused funds to the U.S. Department of Treasury.
The National Restaurant Association is actively seeking clarity on this in federal regulations.
It is likely that debt services will be an eligible expense for RRFG, but the National Restaurant Association is actively seeking clarity on this in federal regulations.
Non-taxable income on the grant is added to the basis for S Corp shareholders and the partner’s basis in a partnership.
It is likely that debt services will be an eligible expense for RRFG, but the National Restaurant Association is actively seeking clarity on this in federal regulations.
This is uncertain and will need to be clarified in federal guidance.
Yes, the law states that “no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income.”
While the American Rescue Plan did not specify a public reporting process or mechanism for grant recipients and/or grant amounts, it is a reasonable expectation that federal grants would be subject to transparency requirements, including the Freedom of Information Act. For example, some PPP loan recipients were originally released by company name and by category of funding in June 2020. Subsequently, a federal court ordered the SBA under the Freedom of Information Act to release all PPP loan recipients by business names and loan amounts.
Grants will not be included as federal taxable gross income by the IRS
A state may be able to increase an eligible entity’s state tax liability associated with its acceptance of a federal RRFG. It will be important for an entity to be aware of its state’s tax conformity with the federal code and how its state plans to treat the RRFG funds. Many states automatically accept changes to the federal tax code, which protect the tax status of RRFG.
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