Franchises are eligible for grants from $26.8 billion Restaurant Revitalization Fund

Many owners of franchise restaurants will be eligible for tax-free grants of up to $10 million through the new $28.6 billion Restaurant Revitalization Fund. The fund was created as part of the $1.9 trillion American Rescue Plan signed into law March 11.

Matthew Haller, International Franchise Association (IFA) senior vice president of government relations and public affairs, hailed the new fund. “Independent restaurant owners have been uniquely impacted by the pandemic, whether there is a brand name on the front door or not. We appreciate the recognition that small franchise owners will have access to this critical program,” Haller said. “IFA also supports additional relief for other hard-hit sectors like hotels, fitness clubs and non-food retailers, and we will continue to advocate for them in future relief efforts.”

The Small Business Administration (SBA) is currently ironing out rules for Restaurant Revitalization Fund grants, but U.S. Rep. Earl Blumenauer, an Oregon Democrat, told Nation’s Restaurant News that he believes the SBA would start processing grant applications “within weeks, not months.”  

Eligible franchises

Franchise owners of food-service and drinking establishments that are not publicly traded and have 20 or fewer locations can apply for the grants. 

Eligible franchises may receive a grant equal to the amount of their pandemic-related revenue losses, which are determined by subtracting 2020 gross receipts from 2019 gross receipts. If the business was not open for all of 2019, the amount of the grant would be the difference between 12 times the average monthly gross receipts for 2019 and the average monthly gross receipts in 2020 (or the SBA might develop a different formula).

If the business began operating in 2020, its grant could be equal to its eligible expenses, with gross receipts subtracted, or possibly a different SBA formula. And if the business hasn’t opened yet but it has incurred eligible expenses, the grant would be made equal to those expenses or a formula from SBA.

Eligible expenses are to have occurred between Feb. 15, 2020, and Dec. 31, 2021 (with a possible extension of two years)—or different dates that will be determined by the SBA. These expenses include but are not limited to:

  • Payroll
  • Principal or interest on mortgage obligations
  • Rent
  • Utilities
  • Maintenance, including construction to accommodate outdoor seating
  • Pandemic-related supplies such as protective equipment and cleaning materials
  • Normal food and beverage inventory

The government-funded grants max out at $10 million per restaurant group or $5 million per individual restaurant location; $5 billion of the fund is reserved for restaurants with gross receipts of less than $500,000. 

Priority groups

For the first 21 days that grants are being administered, the SBA will give priority to establishments owned and controlled by veterans or women, or socially and economically disadvantaged small-business entities. Restaurant owners must certify that current economic conditions make the grant request necessary, that funds will be used appropriately, and that they will apply for and receive only a single grant. Any unused grant money must be returned. 

Tom Bené, president and CEO of the National Restaurant Association, saluted the aid as “a catalyst to reviving restaurants and saving jobs… This fund is a win for the smallest and hardest-hit restaurants that have sacrificed and innovated to continue to serve their communities.”

Additional PPP funding

Owners of non-restaurant as well as restaurant franchises may benefit from an additional $7.25 billion in Paycheck Protection Program funds offered under the new rescue plan. 

Other plan provisions include $1,400 checks for adult members of U.S. households with incomes of $75,000 (phasing out at $80,000), expansion of the child tax credit of up to $3,600 per child, a weekly hike of $300 for unemployment compensation ending in early September, $350 billion for local and state governments, $130 billion to reopen K-12 schools, and more than $75 billion for Covid-19 testing and vaccinations. 

A provision that would have raised the national minimum wage to $15 an hour was removed from the legislation.

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Mary Vinnedge
Mary Vinnedge is an award-winning writer who has served as editor in chief, managing editor and senior editor at national and regional publications, including SUCCESS and Design NJ magazines. A seasoned journalist, Mary covers the latest industry news in her role as staff writer for FranchiseWire

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