Important Information Regarding the Restaurant Revitalization Fund

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By: Steven R. Chadwick, Esq. & William A. Buck, Esq.

On March 11, 2021, President Joseph R. Biden, Jr. signed into effect the American Rescue Plan Act (H.R. 1319) (“ARPA”), marking the largest economic stimulus package in the history of the United States.  In addition to bolstering existing programs such as the Paycheck Protection Program (“PPP”) and COVID-19 Economic Injury Disaster Loans (“EIDL”), ARPA finally offers economic assistance to the hard-hit food service and restaurant industry with the passage of the Restaurant Revitalization Fund (the “RRF”).

As with previously enacted COVID-related initiatives, the RRF is intended to provide tax-free Federal grants, without expectation of repayment[1], in amounts equal to COVID-19 pandemic-related revenue loss. The Small Business Administration (SBA) is charged with the administration and disbursement of the grants and additional information regarding the program, including its launch date, is anticipated imminently.

How Much Is Available:

  • In total, $28.6 billion has been allocated to the RRF, of which $5 billion has been specifically earmarked for businesses having less than $500,000 in gross receipts during 2019.
  • RRF funds are intended to be distributed on a first-come, first-served basis; HOWEVER, the first 21 days following launch grants the administrator the right to prioritize awarding grants to entities owned and controlled by women, veterans or otherwise qualify as socially and economically disadvantaged small business concerns.

Who Is Eligible?

  • ARPA specifically defines the following entities as being eligible to participate in the RRF (each, an “Eligible Entity”):
    • Restaurants; food stands; food trucks; food carts; tap rooms; saloons; taverns; bars; lounges; brewpubs; tasting rooms; caterers; inns; and, the licensed facilities and/or premises of alcohol producers, used for tasting, sampling, or purchasing.
  • Franchisees of non-publicly held entities, owning less than 20 restaurants.
  • PRIOR PARTICIPATION IN PPP ROUNDS 1 AND 2 DOES NOT DISQUALIFY ELIGIBLILTY; however, any grants received will be reduced by any amounts received via PPP.
  • PRIOR RECEIPT OF EIDL (Economic Injury Disaster Loans) or ERTC (Employee Retention Tax Credit) WILL NOT COUNT TOWARD 2020 REVENUES.

Who Is Ineligible?

  • Restaurants/bars owned by a publicly held company; and
  • Restaurants/bars owned by state or local governments;
  • Owners of twenty (20) or more restaurants.

How Much Can I Apply for?

Total RRF is capped at $10 million for an eligible business and $5 million for an individual location, subject to the following generalized calculations.

  • Generally, you can estimate the amount to which an entity may be eligible by subtracting 2020’s Gross Revenues from 2019’s Gross Revenues;
    • If the entity was not operating for all of 2019, the estimate is obtained by averaging the monthly gross revenues for those months of operation in 2019, as well as the average of all monthly gross revenues for 2020. Multiply each monthly average by 12 and then find the difference between 2020’s monthly average and 2019’s monthly average.

Importantly, these calculation formulae may change following additional guidance from the SBA.

  • If the entity is no longer in operation OR if the entity is not yet in operation at the time of applying, the entity may still be able to recover certain “Eligible Expenses.”

What May I Use the RRF funds For?

  • RRF funds may only be used for “Eligible Expenses” incurred between February 15, 2020, and December 31, 2021 (or some later date to be determined by the SBA (the “Covered Period”)).
  • Eligible Expenses include, but are not limited to, payroll, mortgage principal/interest, rent, utilities, maintenance (including construction of outdoor seating), normal food and beverage inventory, etc.

WHAT TO DO NEXT:

  • Contact us or your other advisors as soon as possible for further guidance on the application process. Registration with System of Awards Management (SAM) is required in advance of filing an RRF application, and such registration could take a few weeks. TIME IS OF THE ESSENCE.

If you have any questions about the Restaurant Revitalization Fund or would like to get started on the process, please contact us at restaurants@leechtisman.com and we will get you started.

Steven R. Chadwick is counsel in the Real Estate Practice Group and is based in the firm’s Pittsburgh office. He can be reached at 412.261.1600 or schadwick@leechtishman.com.  

William A. Buck is a partner in the Corporate Practice Group and is also based in the firm’s Pittsburgh office. Bill can be reached at 412.261.1600 or wbuck@leechtishman.com.

Leech Tishman’s attorneys are available to counsel clients on various aspects of COVID-19 related business and nonprofit relief. These attorneys can be contacted at 412.261.1600 or at the email addresses listed below.

Paycheck Protection Program (PPP) Round 1 & 2

William A. Buck
wbuck@leechtishman.com

Federal Employee Retention Credit

Matthew Rak
mrak@leechtishman.com

Alexander J. Gase
agase@leechtishman.com

Restaurant and Hospitality Industry Relief and Grants

Steven R. Chadwick
schadwick@leechtishman.com

Steven D. Irwin
sirwin@leechtishman.com

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Leech Tishman Fuscaldo & Lampl is a full-service law firm dedicated to assisting individuals, businesses, and institutions. Leech Tishman offers legal services in business restructuring & insolvency, corporate matters, employment & labor, estates & trusts, intellectual property, litigation & alternative dispute resolution, and real estate. In addition, the firm offers a wide range of legal services to clients in the aviation & aerospace, cannabis, construction, energy & natural resources, healthcare, and hospitality industries. Headquartered in Pittsburgh, PA, Leech Tishman also has offices in Chicago, Los Angeles, New York, Philadelphia, Sarasota and Wilmington, DE.

[1] Notwithstanding the intent, ARPA does require repayment of grant monies in the event that the recipient discontinues operations OR fails to use all RRF funds during the covered period of February 15, 2020, through December 31, 2021,