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Restaurant Revitalization Fund

  1. Restaurant Revitalization Fund March 24, 2021
  2. Presenters Terry Moncrief Partner (732) 842-3113 Jeremias Ramos Manager (212) 829-3248 Kathy Ennis Partner (407) 849 1569
  3. Topics Covered in Today’s Presentation  What is the Restaurant Revitalization Fund?  Am I eligible for the grant?  How much money can I receive?  How do I apply?  What’s the catch? Learning Objectives
  4. Lost Year For Restaurants  Restaurants have been hit harder than any other industry during the pandemic • 110,000 eating and drinking establishments temporarily or permanently closed for business • 2.5 million jobs erased • $240 billion in lost revenue
  5. Paycheck Protection Program  Helped thousands of restaurants keep their employees on staff  Restaurant industry is uniquely different • Full-service vs Take out • Higher rents lower payroll cost • Capacity limits reduced restaurant staffing by 20%  National Restaurant Association called for targeted relief
  6. Employee Retention Credit (ERC)  Originally was created as an “either or” concept with PPP (those that received PPP funding couldn’t also participate in ERC)  Consolidated Appropriations Act (December 27, 2020) allows businesses that received PPP funds to also apply for ERC if they met ERC qualifications. Retroactive for 2020 as well as extending ERC through June 30, 2021  American Rescue Plan Act of 2021 (March 11, 2021) extends ERC through December 31, 2021
  7. What is the Restaurant Revitalization Fund?
  8. Restaurant Revitalization Fund  American Rescue Plan created a $28.6 billion fund  Grant program specifically targets restaurants • Small restaurants • Preference towards women/veteran/minority owned • Excludes large chain restaurants
  9. How Much Money Can I Receive?  The grant is equal to your pandemic-related revenue drop • The government is essentially compensating you for the drop in gross receipts in 2020 compared to 2019.  Maximum amount for an affiliated group is $5,000,000 per physical location, not to exceed $10,000,000 in total  Grant reduced by PPP loans received in 2020 & 2021
  10. Small Restaurant Example 2019 Gross receipts - $600,000 2020 Gross receipts - $200,000 $400,000 drop in revenue Eligible for a $400,000 grant
  11. Large Restaurant Example 2019 Gross Receipts •Location A - $10,000,000 •Location B - $5,000,000 •Location C - $9,000,000 2020 Gross Receipts •Location A - $4,000,000 •Location B - $2,000,000 •Location C - $3,000,000 Location A  $6 million drop  $5 million grant Location B  $3 million drop  $3 million grant Location C  $6 million drop  $2 million grant  Total capped at $10mm
  12. Restaurant Receiving Grant & PPP 2019 Gross receipts - $600,000 2020 Gross receipts - $200,000 $400,000 drop in revenue Total of $100,000 PPP1 & PPP2 received Eligible for a $300,000 grant
  13. Eligibility Requirements
  14. “Eligible Entity” Restaurant Food Stand Food Truck Food Cart Caterer Inn Tavern Bar Lounge Brewpub Tasting Room Tap Room Saloon Brewery/Winery with tasting or sampling
  15. Simplified Eligibility Business Public or patrons assemble Primary purpose of being served food or drink
  16. Could Make a Case for Eligibility  Ice cream stand  Bakery  Specialized desserts (Chocolatier)  Farmer’s market  Deli
  17. Probably Not Eligible  Non-Profit Dinner (Gala/networking event) • Not a business  Wholesale distribution • Public doesn’t assemble  Grocery/Convenience Store • Food isn’t served
  18. Not Eligible  State or local government business  As of March 13, 2020 owns or operates (together with any affiliated business) more than 20 locations • Regardless if business is under the same or multiple names  Has a pending application for or has received a shuttered venue grant  Publicly traded company
  19. Definition of Affiliated Business  The term ‘‘affiliated business’’ means a business in which an eligible entity has an equity or right to profit distributions of not less than 50 percent, or  in which an eligible entity has the contractual authority to control the direction of the business, provided that such affiliation shall be determined as of any arrangements or agreements in existence as of March 13, 2020.
  21. Who Gets Priority?  $5 billion (21% of the totals funds) will be set aside for entities with gross receipts of $500,000 or less within the first 60 days.  Initial 21 days SBA will prioritize certain businesses owned by: • Women • Veterans • Socially and economically disadvantaged groups
  22. Eligible Expenses
  23. Use of Funds  An eligible entity that receives a grant may use the grant funds for allowable expenses  Covered period for expenses is Feb 15, 2020 – Dec 31, 2021.  The SBA has the power to extend that period out to 2 years after the date of enactment (March 2023)  Entities that close or do not use the funds for allowable expenses must return the funds.
  24. Allowable Expenses • Payroll cost • Principal or interest on any mortgage obligation • Rent • Utilities • Maintenance • Construction to accommodate outdoor dining • Supplies • Food and beverage expenses • Covered supplier cost • Operational expenses • Paid sick leave • Any other expenses the SBA determines essential
  25. Interaction with Other Programs  Can’t double dip wages with ERC  Nothing specifically excludes double dipping with PPP but the SBA takes it off the top • Amount of grant is reduced by the amount of PPP loans received from round 1 & 2.
  26. RRF vs PPP RRF • Payroll - $100k cap • Utilities • Software • Rent • Mortgage payments • Property damage • Worker protection PPP • Payroll - $100k cap • Utilities • Software • Rent • Mortgage payments • Property damage • Worker protection
  27. RRF vs PPP RRF • Maintenance expense • Food and beverage expenses • “Operational Expenses” • Paid sick leave • Other expenses described by the SBA PPP
  28. RRF vs PPP RRF • Doesn’t have to be paid back if used for allowable expenses • Deductible expenses and non- taxable income • No 60/40 split PPP • Doesn’t have to be paid back if used for allowable expenses • Deductible expenses and non- taxable income • 60/40 split with payroll
  29. RRF vs ERC • Payroll & Nonpayroll Cost • Dollar for dollar grant • Deductions still deductible and grant in non-taxable • Short window to apply with limited funds • Certain Payroll Cost • 2020 50% credit 2021 70% credit • Reduces expenses • Funds not limited and longer statue of limits to go back and amend 941s
  30. How to Maximize Benefits  PPP 1&2 more accessible and more funds available but limited to payroll – use 60/40 split  RRF can be a considerable grant but funds are limited - use non-payroll cost  ERC not dollar for dollar and it reduces expenses – can still be a considerable source of refunds ($7,000 per employee per qualifying quarter in 2021) – use first $10k in wages per quarter.
  31. Maximize All 3 ERC – government pays 70% of wages on first $10,000 per employee PPP2 – government pays wages not for ERC up to $46,154 per employee RRF – government pays for operational cost
  32. How to Apply
  33. Apply Directly With SBA  Still waiting for the application to open – SBA to issue guidance in next few weeks  Government grant not SBA loan – not applying with banks but directly with SBA  Women/veteran/minority owned business owners will self-certify to expedite process in the first 21 days
  34. What Should I Do to Prepare?  SBA will prioritize the ability of each applicant to use their existing business identifiers over requiring other forms or registrations.  However, National Restaurant Association recommends taking these steps before the initial application window
  35. Three Steps to Prepare For RRF Send Send a SAM notarized letter to the Federal Service Desk (FSD) – this is a relatively new security procedure. Register Register with the U.S. Federal Government’s System for Award Management (SAM) which is free and can take up to two weeks to process. Sign up Sign up for a Data Universal Numbering System (DUNS) number which is free and can take up to two business days to process, from Dun & Bradstreet (D&B).
  36. Step 1: DUNS  A nine-digit unique identifier number for businesses  DUNS is a standard way to interact with government, trade, and industry organizations 
  37. Step 2: Sign Up at  To sign up, entities must create a user account and to access/register for SAM.  On the My SAM page, select Register New Entity and select your type of entity.  If registering in strictly for RRF, select • “I only want to apply for federal assistance opportunities like grants, loans, and other financial assistance programs.” in response to the question: • “Why are you registering this entity to do business with the U.S. government?”
  38. Step 2: Core Data Section on  Completing the Core Data section: • Validate DUNS information • Enter Business Information such as Tax Identification and create a Marketing Partner Identification Number (MPIN), which is used to apply in • Enter CAGE Code if you already have one (if not, one will be assigned after registration). CAGE codes are tied to DUNS Numbers and cannot be reused. • Enter General Information (business types, organization structure). • Provide Financial Information, such as U.S. bank Electronic Funds Transfer (EFT) Information for Federal government payment purposes. • Answer the Executive Compensation questions. • Answer the Proceedings Details questions.
  39. Step 2: Point of Contact  Complete the Points of Contact (POC) section: • The Electronic Business POC is critical since the government systems, like the CAGE program, use it to contact the business regarding awards. List someone with direct knowledge of all registrations.  Complete Representations and Certifications section: • Select Yes/No on the Financial Assistance Response page.  Make sure to Submit after final review. A “Registration Submitted – Confirmation” message will flash on the screen. If this message does not appear, the registration has not been successfully submitted.
  40. Step 3: Notarized Letter 1. Download the Letter Template • A Single entity uses Template 1: • Multiple entities use Template 2: 2. Complete Letter and Insert Business Letterhead • If letterhead is not available, enter your entity’s legal business name and physical address at the top of the letter before printing. 3. Signed Completed Letter in Presence of Notary • Ensure signatory has business authority and can confirm identity in accordance with the local state’s notary procedures. 4. Scan Completed/Signed Letter and Submit to Federal Service Desk by creating a service ticket and attaching the scanned letter. • Enter in System of Award Management • (SAM); Issue Type; Business Type; DUNS Number; and “Subject: Letter Designating Entity • Administrator - New Registration,” and “Question: Please review the attached letter designating our Entity Administrator.”
  41. Pause The Ink is still dry - no guidance from the SBA yet Be hesitant of vendors who claim to know everything about the application process Partner with a trusted professional who has a track record of walking you through these new rules
  42. Frequently Asked Questions
  43. What if I Started a Business in 2019  Compare average monthly annualized gross receipts from 2019 to 2020  Restaurant opened in July 2019 had average, monthly gross receipts from July to December of $100,000. In 2020 the same restaurant had gross receipts of $500,000 for the entire year. The eligible revenue loss would be $700,000 ($100,000 x 12 = $1,200,000 annualized 2019 gross receipts – $500,000 2020 gross receipts = $700,000).
  44. What if I Started a Business in 2020?  Compare gross receipts for 2020 to allowable expenses  A business started in February 2020 had total qualified expenditures of $700,000 and gross receipts of $500,000. It would be eligible for a $200,000 grant.
  45. Do I Count My Non-Restaurant Locations?  Example: 25 locations in business enterprise • 10 restaurants • 5 car washes • 5 convenience stores • 5 gas stations  Unclear if the count includes all affiliated businesses or just affiliated restaurant businesses
  46. What if I Have a “Mixed Use” Business  Example: Deli/Convenience store  No guidance yet so default will probably be to look at the NAICS code
  47. Do I Apply Separately for Each Business  Each eligible entity can apply for the grant, but the aggregate maximum rules apply  Probably will look like the PPP application process
  48. Questions?
  49. Contact Your Presenters Terry Moncrief Partner (732) 842-3113 Jeremias Ramos Manager (212) 829-3248 Kathy Ennis Partner (407) 849 1569