Like we talked about last week, the American Rescue Plan that was signed into law in March included a number of provisions that are now being implemented. Today I want to talk about another one – the Restaurant Revitalization Fund (RRF).
I know it appears obvious in the title, but who does this apply to?
- Not only restaurants, but also food stands, food trucks and food carts.
- It also includes Caterers, but also includes bars, saloons, lounges and taverns.
So this has to be a business who sells to the general public?
- Yes, because it also applies to bakeries, brew-pubs, breweries, microbreweries and wineries.
- In these cases, at least 33% of gross receipts must be sold to the public on-site.
- So a wholesale bakers or winery that sells to retailers would not qualify unless they also sell 33% at their location.
- Inns also qualify, but they also have to show that food and beverage sold on-site makes up at least 33% of the total gross receipts.
What type of entity can take advantage of this?
- This is available to corporations (both c and s), partnerships, LLCs, sole proprietors and other self-employed individuals.
- But it is now available for non-profit organizations.
- The business also has to be open currently to qualify.
What if a business received PPP funds. Are they still eligible?
- Yes, but the math gets a little harder.
So how does the math work?
- Start with you 2019 gross receipts as reported on your tax return.
- Compare that to-
- 2020 gross receipts, plus the amounts received from PPP 1 and 2.
- Quick example – If you had $100k of gross receipts in 2019 and your 2020 gross receipts including PPP 1 and 2 was $80k, then the program would pay you $20K
Do the funds need to be paid back?
- No as long as you spend it for qualified expenses before March 11, 2023.
Are the funds taxable?
- At this point we do not know, so I would assume they are at this point.
We are quickly running out of time, anything else we should know?
- Yes – business would go right to the SBA website to apply
- The program opened on Friday, April 30.
- For the first 21 days, priority will be given to businesses owned by veterans, women, and economically and socially disadvantaged individuals.
The Restaurant Revitalization Fund (RRF) can be more complex than a person might think, so it is a good idea to talk to a tax professional to make sure you are doing it right.