The latest COVID Relief Bill provides grants for restaurant Owners. The Restaurant Brokers at We Sell Restaurants share the details.
On Saturday afternoon, the U.S. Senate passed the $1.9 trillion COVID relief bill. While plenty of money in this bill is going overseas and funds everything but virus related issues, there is finally some direct relief for the restaurant industry.
The National Restaurant Association lobbied hard for this bill which makes $28.6 billion in relief, specific to restaurant owners, available. This is great news for many holding on by a thread, especially in states that continue to be shut down.
A key element of the plan are government-funded grants with a maximum of $10 million per restaurant group or $5 million per individual restaurant location. This is what the Restaurant Brokers at We Sell Restaurants have learned so far about the bill, which we predict to be a game changer for independent restaurants.
Our restaurant owners and sellers need to immediately position themselves to apply. We Sell Restaurants will keep you posted the minute the portals become available. For now, here is what you need to know.
Who is Eligible?
Restaurants, bars, caterers, breweries, taprooms and tasting rooms. You cannot be part of a restaurant group with more than twenty locations and cannot be publicly traded. If you are owned by a private equity firm, there are also some limits.
What do the Grants Cover?
Restaurant owners can spend the funding on payroll and benefits up to $100,000 a year. You can also pay mortgage, rent, utilities, maintenance, supplies, buy food and beverages, pay suppliers and cover other operational costs.
What is the time period?
The covered period is from February 15, 2020 through Dec. 31, 2021.
Can Restaurant Owners get grants if they already qualified for PPP or EIDL assistance?
Yes. The grants can be combined with the two rounds of PPP, EIDL, and the Employee Retention Tax Credit. The amount received for any PPP loans will be subtracted from the eligible grant total.
How will Grants be calculated?
Grants will be calculated based on how long a restaurant has been open with a deduction for PPP loans already received. As this Restaurant Broker understands it, the calculation would look like this for a store open in 2019
2020 Average monthly Revenue minus 2019 Average Monthly Revenue minus 1st & 2nd PPP loans = Grant amount available
They are also allowing restaurant owners that opened in 2020 to apply but the basis of this is less clear and is stated by the National Restaurant Association to be: “2020 Revenue minus “eligible expenses incurred” minus first- and second-draw PPP loans received last year.” We do not yet understand what “eligible expenses incurred” are but will stay on top of this to define the term.
Lastly, they are even allowing restaurants that have not yet opened to apply stating they can receive “funding equal to eligible expenses incurred before the date of enactment.”
Is there any Prioritization?
Yes. Restaurant relief will be prioritized to fund socioeconomically disadvantaged businesses. Women, veterans or socially/economically disadvantaged groups will get priority in the first 21 days of grant applications.
The program is aimed to help small operators so 20% of the total or $5 billion of the $25 billion total in grant relief is reserved for restaurants with less than $500,000 in gross receipts in 2019.
Funds left after the first 60 days of grant eligibility will be opened to larger businesses.
What about the fine print?
There are always rules and requirements. Applicants will have to certify their uncertain economic conditions. Expect the SBA to implement other requirements or measures to cut down on fraud and abuse possibilities. In addition, any permanently closed business must return their SBA funds.
Count on We Sell Restaurants to keep you posted on this and all other COVID related relief for restaurant owners.