The restaurant industry has been hit especially hard during the COVID-19 pandemic.  In efforts to provide some relief to the industry, the American Rescue Plan Act of 2021 (ARPA) signed into law on March 11, 2021 includes $28.6 billion for a Restaurant Revitalization Fund.  The money will be available until expended, and the U.S. Small Business Administration (SBA) will administer the Fund.

Eligible restaurants, food trucks, caterers, and similar businesses will be able to apply for a restaurant revitalization grant equal to an entity’s “pandemic-related revenue loss” with a maximum grant size of $10 million per eligible entity and limited to $5 million per physical location of the entity.  For federal income tax purposes, any grants received by an eligible entity are not taxable, and deductions are allowed for otherwise deductible costs paid with the grant funds.  The funds can be used to cover allowable costs for the period from February 15, 2020 through December 31, 2021.  Allowable costs include payroll costs, mortgage payments (no prepayments), rent (no prepayments), utilities, maintenance expenses, supplies, food and beverage expenses, covered supplier costs, operational expenses, paid sick leave, and any other expense determined by the SBA to be essential to maintaining the business.

The SBA is expected to put forth additional guidance including an application and approval process.  While we wait for further developments, we encourage potentially eligible entities to review information from the Independent Restaurant Coalition which explains what businesses can do now to prepare for the application.  To receive a grant, entities will need a Data Universal Numbering System (DUNS) number and to be registered with the System for Award Management (SAM).  For additional assistance or to discuss your eligibility and further details including required certifications, interaction with the Payroll Protection Program and other programs, and provisions for return of funds, please reach out to your Kemper tax professional.