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In every Illinois city we visited since the pandemic began, we have witnessed how the restaurant industry has suffered. But there is hope that things might start to turn around with the American Rescue Plan Act of 2021 signed by President Joe Biden on Thursday, March 11. The act establishes a Restaurant Revitalization Fund of $28.6 billion for restaurants impacted by COVID-19.

The Small Business Administration will be responsible for allocating the grants.

Who is eligible?

As long as you belong to the restaurant industry, you probably qualify for the grants. This includes restaurants; food stands; food trucks; food carts; caterers; saloons; inns; taverns; bars; lounges; brewpubs; tasting rooms; taprooms; airport terminal eateries; alcohol producers with facilities where tastings, sampling, and purchasing occurs; or any similar gathering place for food and drinks.

The only food and beverage businesses that do not qualify include state- or local-government-operated businesses, publicly traded companies, businesses with more than 20 locations (as of March 13, 2020), and those with pending applications for or those who have received a grant for Shuttered Venue Operators.

How will grants be calculated?

Many restaurants faced revenue loss due to the pandemic, and that’s what these grants are focused on.

Loss would be calculated through the difference between 2020 and 2019 annual gross receipts of the business.

Gross receipts instead of gross sales are being used, which means any Paycheck Protection Program loans you might have gotten will be taken into account, along with other income through donations or interest.

And don’t panic if you opened after January 2020 and then closed down, were only partly  functional in 2019, or haven’t started yet but do have expenses, as you could still be eligible with adjusted calculations.

Of the total $28.6 billion available, $5 billion is for small businesses (those with 2019 annual gross receipts of no more than $500,000), while the remaining amount is for everyone else.

How much will the grants be?

While each grant will reflect the revenue loss, there are some limits in place, as grants will not go above $10 million for a restaurant group or $5 million for a location. If you get funds greater than your 2020 annual gross receipts, you will have to return them unless the SBA decides otherwise.

Actually, a lot comes down to the SBA. For example, the administration can adjust grants based on the local costs in your area. After the first 60 days, it can even make grants available regardless of the annual gross receipts.

What can the grants be spent on?

If you qualify, you can use the funds for every essential need of the business, inluding food and beverage expenses; supplier, operation, and payroll costs; paid sick leaves; mortgage and rent payments; utilities; maintenance costs such as constructing outdoor seating; furniture; fixtures;  equipment; and protective equipment and cleaning materials. Outside of these categories, the SBA could still allocate funds where there is need.

The period covered by the grants would be Feb. 15, 2020 to Dec. 31, 2021, which can be extended up to two years by the SBA.

How will grants be distributed?

Full details aren’t out yet, but grants will be awarded based on the order in which applications are received, making it a first-come-first-served system.

For the first 21 days, businesses owned or controlled by women or veterans or socially and economically disadvantaged small businesses will be given priority. If you identify as such, include that in your application.

The application process will be simple in that you can apply using documents you already have.

However, you will need to confirm that the business needs the grant due to the pandemic and that you aren’t waiting for or receiving a grant for Shuttered Venue Operators.

What happens if grant funds are not used?

If you don’t use the grant or permanently close down on or before the last day of the covered period, you would have to return the funds.

What can I do in the meantime?

Stay on the lookout, as in the coming weeks, the SBA will outline the application process in detail.

For now, the Independent Restaurant Coalition has come up with a guideline for how businesses can prepare for applications, which can be consulted here.

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