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Coffee Businesses Eligible to Tap Into the $28.6 Billion Restaurant Revitalization Fund

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United States President Joe Biden last Thursday signed the $1.9 trillion coronavirus relief and stimulus package, known as the American Rescue Plan. A major component of the bill is a $28.6 billion Restaurant Revitalization Fund, which is likely to affect thousands of U.S. coffee retailers.

Over the past weeks as the total relief package has moved through Congress, it has experienced numerous revisions, including the removal of a $15 minimum wage; $1,400 direct stimulus checks for most Americans; a raft of health-related, insurance-related and social provisions; and an increase of $3.6 billion for the restaurant revitalization component.

No matter what angle the plan is viewed from, it involves the single largest financial relief program ever to target the restaurant sector in the United States, and it specifically sets aside funds for small and independent restaurants with less than $500,000 annual revenue — a category occupied by many small coffee retailers.

Here are some of the most prominent elements of the American Rescue Plan’s Restaurant Revitalization Fund likely to affect coffee shops, their owners and their workers:

$28.6 Billion in Restaurant Grants

Unlike the Paycheck Protection Program (PPP) loans that many purveyors received in the two previous federal coronavirus relief packages, the $28.6 billion comprising the Restaurant Revitalization Fund will be distributed through grants, meaning recipients can spend the money wherever it may be needed, with no repayment required. In other words, funds can be used for any operating expenses or debt repayment.

Current expense types outlined in the act include: Payroll costs (excluding employee compensation exceeding $100,000 per year); paid sick leave; mortgage, rent and utilities; maintenance (including outdoor seating construction); supplies, protective equipment and cleaning materials; food and beverage expenses within the scope of the normal business practice of the entity; operational expenses; and covered supplier costs.

As outlined in the law, grants will be administered by the Small Business Administration (SBA). In practical terms, the administration of the grants is expected to work more like the administration of the SBA’s economic injury disaster loans (EIDL) than the administration of the PPP loans, which went through approved lenders such as banks or credit unions.

The SBA has not yet established a portal or mechanism for businesses seeking grants, although that is widely expected within the coming weeks. For the first 21 days of grant applications, the SBA has been ordered to prioritize establishments owned by women, veterans, or economically and socially disadvantaged groups.

Just over $5 billion has been set aside for businesses with gross sales were below $500,000. That earmark has been established for the first 60 days of grant administration.

How Much? 

In short, the difference from 2019 to 2020. Cash grants will be equal to the amount by which gross sales decreased in the 2020 calendar year compared to 2019, minus the amount of any PPP loans received.

Grant amounts are capped at $10 million per recipient and $5 million per location.

Who Qualifies?

In short, businesses where people primarily assemble for food or drink. This is not limited to brick-and-mortar locations, and may include tasting rooms, mobile trucks, bars, lounges and more.

Businesses must self-certify that gross receipts from 2020 were lower than in 2019.

According to the law, the grant program is not available to publicly traded companies, or to businesses that had more than 20 locations as of March 10, 2020.

Spending and Taxation

Grant funds must be spent or returned by December 31, 2021.

The grant will be excluded from 2021 gross income, and businesses will be able to deduct expenses paid with grant funds from their gross income.

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