April 18, 2022
Originally established by the American Rescue Plan Act of 2021, the Restaurant Revitalization Fund (RRF) was designed to provide needed capital to help restaurants and other hospitality businesses keep their doors open. As one of the hardest-hit industries by the combination of stay-at-home orders and forced business closures, the capital infusion was desperately needed. The RRF provided up to $10M per business was available and repayment was not required assuming monies were used to pay eligible expenses. Unfortunately, the program was so popular the initial $28B allocation was exhausted within days and the RRF portal closed amongst controversy. In fact, it is estimated that 20 percent of eligible applicants were denied any award.
As the one-year anniversary of the American Rescue Act quickly approaches, Congress may be set to authorize more relief. The Relief for Restaurants and Other Hard Hit Small Businesses Act of 2022, which calls for an additional $42B to replenish the program was passed by the House last month. There are also provisions that give priority to past applicants who did not receive funding and creates the Hard-Hit Industries Award Program. The progress of the legislation is welcome news for many Atlanta restaurant owners still struggling with financial difficulties inflicted by the pandemic. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.
Originally, the RRF contained $25 billion for eligible restaurants, bars, caterers, and other hospitality businesses.
Other eligible hospitality businesses include:
*at least 33 percent of gross receipts are onsite sales to the public
Applicants could receive a grant of up to $10 million or equal to pandemic-related losses, or up to $5 million per physical location. Funds could be used toward payroll, mortgage or rent, utilities, maintenance, operations, paid sick leave, and supplies. RRF recipients would also be off the hook for repayment if awarded funds are used for eligible expenses no later than March 11, 2023.
Even though the first 21 days were supposed to be reserved for certain economically disadvantaged or minority applicants, the program’s surge resulted in more than double the expected volume. Many businesses had applications outright denied due to lack of funding; others were notified they would receive funding but were later shut out of the program. In all, $28.6 billion went to about 105,000 businesses before the fund was exhausted.
HR 3807 was originally introduced in June 2021. It would have put $42 billion back into the RRF, but never went anywhere. The updated version called the Relief for Restaurants and Other Hard Hit Small Businesses Act of 2022 passed the House on April 7, 2022.
Priority would be given to applicants who did not previously receive relief funds. In addition to restaurants and other hospitality businesses, the legislation establishes the Hard-Hit Industries Award Program. Grants of up to $1 million would target small businesses with pandemic-related losses of 40 percent or more. Priority will be given to businesses that experienced losses of 80 percent or more, followed by a 60 percent loss. Funds can be used toward the mortgage, rent, utilities, or payroll. It also extends the timeframe to use Shuttered Venue Operators Grant funding to March 11, 2023.
The bill now moves to the Senate.
A similar bill, S.4008, was also introduced in the Senate. The Small Business COVID Relief Act of 2022 would infuse extra money into the RRF plus expand eligibility to other business categories as follows.
About $8 billion would go to these other affected businesses while $40 billion would be earmarked for restaurant establishments. Some funds would be taken from unspent Paycheck Protection Program money.
The new legislation is also meant to address previous concerns about transparency and oversight. For example, if there isn’t enough funding for all eligible applicants, then money would be prorated across businesses so that every eligible applicant would receive some financial aid.
And while new applicant rules would prohibit singling out women- or minority-owned hospitality businesses, the Senate version does allocate some funding to Alaska businesses and other communities that were essentially shut off from the rest of the U.S. when borders closed early in the pandemic.
In Georgia, the latest COVID variants continue to affect hospitality operations. Three-quarters of surveyed Georgia hospitality businesses said that business conditions were worse in January 2022 than just three months prior. Two-thirds of Georgia’s hospitality businesses are still experiencing lower sales volume compared to 2019. And most hospitality businesses are dealing with higher costs than a year ago.
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There’s no timeline for when either the House or Senate version of these bills could move forward. However, the bipartisan support of the legislation means it is likely more federal funding will be allocated in the coming months. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to assisting you soon.