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The RESTAURANTS Act would allow individual restaurants to receive up to $5 million in government-backed grants.

$25 billion in restaurant relief is one step closer to passing in Congress: here’s what it would mean for business owners

The restaurant relief fund based on the original RESTAURANTS Act that would distribute grants of up to $10 million to small restaurants will be voted on the week of Feb. 22

The House Small Business committee on Wednesday voted to approve a budget reconciliation bill that would provide $25 billion in relief to restaurants, moving the proposed bailout one step closer to a full House vote.

The budget amendment — part of President Joe Biden’s $1.9 trillion COVID-relief bill — is based on the $120 billion RESTAURANTS Act calling for long-term relief for restaurants, which was reintroduced earlier this month. The Senate also passed a budget resolution amendment Feb. 4 indicating bipartisan support for restaurant industry relief. The move is an attempt to push through some measure of restaurant industry relief without the need for Republican support.

During the week of Feb. 15, the House Budget Committee is expected to put the legislative package together for a vote. The full House of Representatives is scheduled to vote on the relief package the week of Feb. 22, with a Senate vote to follow if it passes.

Here’s what we know so far about the restaurant relief fund based on the RESTAURANTS Act bill that was originally proposed by Rep. Earl Blumenauer (D.-Ore.) during the 2020 Congressional session. The bill was passed by the  House in October, but was never introduced under the then-Republican-led Senate.

  • The $25 billion round of funding would be divided into government-funded grants with a maximum of $10 million per restaurant group or $5 million per individual restaurant location.
  • Eligible businesses include foodservice and drinking establishments like restaurants, bars, caterers, breweries, taprooms, and tasting rooms that are not part of an affiliated restaurant group with more than 20 locations. Participants cannot be publicly traded and there are limits on private equity firms. Participants also cannot currently be an applicant for the Shuttered Venues Operators grant program.
  • Grants can be spent on payroll and benefits up to $100,000 a year, mortgage, rent, utilities, maintenance, supplies (including PPE and cleaning products), food and beverages, supplier costs, operational expenses, and paid sick leave
  • The covered period is from Feb 15, 2020 through Dec. 31, 2021.
  • The grants can be taken alongside the two rounds of PPP, EIDL, and the Employee Retention Tax Credits, though any PPP loans already received will be subtracted from the eligible grant total for any individual business.

“We’ve cleared another important hurdle in our long fight to provide local, independent restaurants the help they need,” Rep. Blumenauer told Restaurant Hospitality. Rep. Blumenauer introduced the reupped legislation with his colleagues Sens. Roger Wicker (R-Miss.) and Kyrsten Sinema (D-Ariz.), and Rep. Brian Fitzpatrick (R-Pa.).

“Portland and communities across the country would not be the same without these beloved establishments, which is why I worked with local chefs and restaurateurs to craft legislation that meets their direct needs,” he added. “I’m glad the House Small Business Committee has moved our proposal forward. We are one step closer to securing desperately-needed restaurant relief.”

Grants are calculated differently based on how long a restaurant has been open and the PPP loans they might have already received. For example, for established restaurants that opened in 2018 or earlier, grants are calculated by subtracting a business’ 2020 revenue from their 2019 revenue, and also subtracting first- and second-draw PPP loans received in 2020.

For restaurants that opened in 2019, the average of 2019 monthly revenues is multiplied by 12 minus the average of 2020 monthly revenues multiplied by 12, and the first- and second-draw PPP loans received are also subtracted.

Restaurants that opened in 2020 are eligible to receive funding equal to the “eligible expenses incurred” minus their first- and second-draw PPP loans received last year. Restaurants that have not yet opened are also eligible and can receive “funding equal to eligible expenses incurred before the date of enactment.”

The restaurant relief fund prioritizes socioeconomically disadvantaged businesses, with businesses owned by women, veterans or socially/economically disadvantaged groups prioritized in the first 21 days of grant applications. Additionally, $5 billion of the $25 billion total is reserved for restaurants with less than $500,000 in gross receipts in 2019. Any funds leftover after the first 60 days of grant eligibility will be opened up to larger businesses.

Other aspects of the fine print include mandatory applicant certification of their current uncertain economic conditions. The SBA may also impose other requirements on applicants to mitigate fraud and abuse possibilities. Any permanently closed business must return their SBA funds.  

Contact Joanna Fantozzi at [email protected]

Follow her on Twitter: @joannafantozzi

Correction: February 18, 2021
A previous version of this story incorrectly labeled the restaurant relief fund as the RESTAURANTS Act. These are technically two separate, possible avenues of relief for restaurants.
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