With the Small Business Administration (SBA) ad At the end of last week, during a Senate hearing on the plan to roll out the Restaurant Revitalization Grant (RRG) program, under the American Rescue Plan Act of 2021 (Act), from the start April, potential applicants should start preparing for the application process.
I. Summary of the RRG program
As we discussed in our previous article, this $ 28.6 billion RRG program will provide much-needed economic relief to restaurateurs who have been hit hard by government shutdown orders, social distancing requirements, and operating limitations. and hours due to the COVID-19 pandemic. To recap: “eligible entities” can search grant for their “pandemic revenue loss,” up to a total of $ 10 million (including a cap of $ 5 million per physical location for entities with more than one location). The amount of the grant is equal to the applicant’s 2019 gross receipts minus (a) the applicant’s 2020 gross receipts and (b) the amounts, if any, received for loans from the first and second draws of the Protection Program. paychecks (PPP).
For example, suppose a restaurant’s gross revenue in 2019 was $ 12 million. Gross receipts for 2020 were $ 3 million and the two PPP loans were $ 2 million and $ 2.5 million. The candidate would be eligible for a grant of $ 4.5 million (12 – 3 – 2 – 2.5 = 4.5).
Most restaurants, food trucks, brasseries, caterers and bars will be considered “qualifying entities” as long as they (and their affiliates) have no more than 20 locations, are not listed on the stock exchange, and have not received from closed place. Exchange for operators.
Also note, unlike the PPP loan program, RRG grants currently contain no restrictions on how funds are to be spent – meaning there is no 60% payroll requirement. This is a huge benefit for many restaurants who have found it difficult to pay rent and other costs under the P3 loan due to the requirement of salary expenses. The SBA can change this once the regulation begins, as it did with P3s, but since the objectives of the programs are different, one would hope that this is not the case.
II. Distribution of funds
There has been some confusion about how the program money will be allocated.
First, according to the law, $ 5 billion is reserved for small candidates (those with incomes in 2019 of less than $ 500,000) for 60 days from the date the law is signed (which brings us to May 10). 2021), or until a later date, the SBA sets its rules. We anticipate that the SBA will also impose a 60-day limit on this pool of funds from the date it opens applications. In other words, if the SBA opens applications on April 15, 2021, we anticipate that these funds will be set aside until June 14, 2021. If there is any money left in that $ 5 billion pool after that. May 10, 2021 (or the latest date set by the ASB), it will be added to the general pool for use by other applicants.
Second, under the Act, the remaining $ 23.6 billion will be made available to all applicants. at once once the program is open. Any candidate whose turnover exceeds $ 500,000 in 2019 will compete in this pool.
In addition, the law provided for a “preference period” for small businesses owned by women, veterans and disadvantaged during the first 21 days when the pool of applicants opens. It is currently unclear whether this will exclude other applicants from receiving funds during this 21-day period, but the legislation does not appear to indicate that will be the case.
III. Preparation of the application
Industry contacts were concerned that the grant application would require registration in SAM.gov, which is time consuming. However, on March 30, 2021, the SBA tweeted that would be to abandon this normal process. This is great news, as it will save restaurateurs hours that already need a break.
Before launching the application, you can start gathering the documents proving your difference in income (i.e. tax returns, financial statements, etc.), as well as any loan documentation on PPP loans that you have received. In addition, you will likely need organizational documents (organization statutes / incorporation, operating agreements, etc.) to prove your date of establishment. Having these documents on hand can facilitate a request.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought on your particular situation.