Business Update - American Rescue Plan Act
March 19, 2021
$28.6 Billion in Relief for Restaurant Industry
American Rescue Plan Act of 2021(“ARPA”)—Restaurant Revitalization Act (“RRA”)
- The ARPA provides $28.6 billion in grants designed to support the recovery of small and medium-sized food and beverages businesses. The grants will be awarded by the SBA, and individual businesses are eligible to receive up to $5 million in grants, while businesses with up to 20 locations are eligible for a maximum of $10 million.
- The RRA grants are not treated as taxable gross income by the IRS.
- Eligible Entity— any restaurant is eligible if it’s consider a place where public or patrons can gather for the primary purpose of being served food or drink. Businesses that are not eligible include: state or local government-operated businesses; businesses, that as of March 13, 2020, own or operate more than 20 locations; publicly traded companies; and businesses with a pending application for or have received a grant as part of the “Save our Stages Act.”
- Distribution— for the first 60 days after enactment, $5 billion will be dedicated to businesses that had a maximum of $500,000 in gross receipts during 2019. During the initial 21-day period, grants will be prioritized for socially and economically disadvantaged small businesses and businesses owned by women or veterans. Remaining $23.6 billion will be distributed in first come first-served basis, and in an equitable manner to eligible entities based on annual gross receipts.
- Grant Amount— the amount of the grant will be equal to the pandemic-related revenue loss, measured by comparing the businesses’ 2020 revenue with its pre-pandemic revenue in 2019. Additional factors include length of time a business has been operating and whether it has received any PPP loans. Grant amounts will be reduced by the amount of PPP loans received by the business. The difference between the 2019 and 2020 gross receipts, minus the amount of PPP loans received must yield a value greater than $0 to be eligible.
- Eligible Expenses— payroll costs, rent payments, utilities, maintenance expenses (including construction of outdoor seating and wall, floors, deck surfaces, furniture, fixtures, and equipment), supplies, food and beverage expenses that are within the scope of normal business practice, operational expenses, paid sick leave, covered supplier costs and covered operational expenditures (as defined by the SBA under the PPP program), and any other expenses deemed essential by the SBA.
- Returning Funds— if a business is unable to use the full grant by December 31, 2021 or permanently closes before December 31, 2021, all remaining funds must be returned to the government.
- Application Process— Details on how to apply have not yet been made available by SBA. To apply for a grant, businesses must make a “good faith certification” that the uncertainty of current economic conditions make it necessary for them to request a grant to support their ongoing operations and that they have not applied for or received any grants that are part of the Save our Stages Act.
If you have questions about these highlights, please reach out to our Corporate Law Department.
The content of this post is for informational purposes only and should not be construed as legal advice or legal opinion. You should consult a lawyer concerning your specific situation and any specific legal question you may have.
Tags: covid-19, Stimulus Package