On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (ARPA) which contains specific provisions for the benefit of restaurant owners. Section 5003 of the ARPA establishes the Restaurant Revitalization Fund (RRF) to include $28.6 billion earmarked for nontaxable grants to eligible restaurant entities. $5 billion of this total amount will be designated for restaurants with 2019 gross receipts of $500,000 or less.
What Restaurants are Eligible?
The ARPA defines an “eligible entity” as:
- A business that is a restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample or purchase products, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink, and;
- As of March 13, 2020, owns or operates 20 or fewer locations, when grouped together with any affiliated businesses.
An eligible entity includes the above restaurants and other specified food or beverage businesses that are located in an airport terminal or that are a tribally owned business. It does not include, however, an entity that is a state or local government operated business or a publicly traded company. Additionally, restaurants must certify they have not applied for nor received a Shuttered Venue Operator grant under Section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act.
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The RRF grant program has created an opportunity for restaurants to reclaim some economic footing. With funds available up to $5 million per qualifying restaurant and $10 million for a qualifying restaurant affiliated group, the RRF grants are another welcome source of tax-free capital funding for a struggling industry during the ongoing COVID-19 pandemic.