The Restaurant Revitalization Fund application process closed on May 24th, 2021. More than 360,000 restaurant and foodservice business owners applied, vying for their share of the RRF’s budgeted $28.6 billion. Unfortunately, the funding sought by applicants totaled over $75 billion, meaning that many restaurateurs would be left out in the cold. Despite COVID health measures relaxing and the summer high season upon them, many restaurants continue to struggle. The National Restaurant Association, a business organization advocating for the interests of the restaurant industry, is committed to applying pressure on state legislators for the RRF to be replenished.
Sean Kennedy, EVP of public affairs at the National Restaurant Association points out, “legislators need to understand that the restaurant industry is digging out of hundreds of billions in losses and that almost no restaurant will be ‘back to normal’ anytime soon.”
What’s Next for RRF Grant Recipients?
After you’ve received your Restaurant Revitalization Fund grant, it’s important to keep track of how your business is allocating the funds from now until 2023 so that you are prepared in the event of an audit.
Follow these useful guidelines by the National Restaurant Association to stay organized and ready for reporting, audits, and tax season:
Keep all relevant business information handy, including business incorporation dates, ownership documentation, sales data, and assertion of grant priority.
Determine where RRF funds will be spent. You must make sure that expenses fall into approved expense categories. Failure to do so could result in having to repay the money or be subject to a federal fraud investigation.
Use an Expense Tracker like the one pictured developed by the National Restaurant Association in association with the American Institute of Certified Public Accountants.
Remember that RRF can only be used to pay down the principal and interest on a loan, but cannot be used to repay a loan in full or to pre-pay on interest.
RRF funds can be used to cover employee wages provided they are making under $100,000.00 per year.
RRF grants are not subject to federal taxes, however, some states have chosen to tax these vital business grants. Verify that you are not responsible for reporting your RRF grant in state tax filings. If you believe that your state should respect the tax-exempt status of these grants, the Council of State Restaurant Associations can direct you to restaurant associations in your state where you can lend your voice in petitioning the representatives elected to advocate for the needs of constituents like you.
Prepare for public reporting. Federal grants like the RRF come with a reasonable expectation of transparency and are thus subject to public reporting under the Freedom of Information Act.
What’s Next If Your Business Was Not Awarded RRF Grant Funds?
For qualifying businesses that are not able to receive funds, it’s important to recognize that there are other avenues for funding and cost-cutting measures. According to experts at LeaseQuery, restaurant owners can take advantage of new lease accounting standards to learn about their lease portfolio and identify where costs can be saved.
Since the pandemic, some restaurant owners have already had to negotiate lease terms or made rent concessions with their lessor. Since economic recovery will take a while, it could be beneficial to look into this, if you haven’t already done so.
State Level Relief Options for Restaurant Owners
Check to see if your state has any funding programs. Various states such as New York, Maryland, California offer restaurant resiliency programs where either funding or skill training is available for eligible restaurants. For example, California approved grants of up to $25,000 for small businesses and restaurants.
It also signed Assembly Bill 80 (AB 80) making forgiven PPP loans for restaurants not to be counted as taxable income on state tax returns. There’s also city-specific aid for restaurants and bars in the Los Angeles area which would include plans to reduce alcohol permit fees and provide financial aid for street cart vendors.
Things Are Getting Better
COVID-19 presented restaurant owners with unprecedented challenges and relief measures have not been sufficient to satisfy demand. That said, the vaccine roll-out has coincided with the summer high season, and Americans are eager to get out and enjoy the simple pleasures they have been barred from over the past 18 months.
Restaurants are widely acknowledged to be the cornerstones of every neighborhood. Plans to go out always involve grabbing a bite or cup of coffee before going onto shop or seek entertainment in those hot spots. With the cost-cutting measures and innovative thinking that restaurant owners have employed to keep their businesses afloat through 2020 and 2021 so far, these businesses will be primed to not only go back to business as usual but see more success going forward.
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